Game developer

World Bank president slams Microsoft’s $69 billion buyout of game developer as poor countries struggle

The Microsoft logo is seen on a smartphone placed over Activision Blizzard game characters displayed in this illustration taken January 18, 2022. REUTERS/Dado Ruvic/Illustration

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The Microsoft logo is seen on a smartphone placed over Activision Blizzard game characters displayed in this illustration taken January 18, 2022. REUTERS/Dado Ruvic/Illustration

World Bank President David Malpass on Wednesday criticized Microsoft’s $69 billion buyout of game developer Activision Blizzard as a questionable capital allocation at a time when poor countries struggle to restructure their debts and fight against COVID-19 and poverty.

Malpass told a Peterson Institute for International Economics virtual event that more capital needed to flow to poor countries, but those flows have been disrupted by unusually loose monetary policies in developed countries.

He said he was struck by the size of Microsoft’s acquisition deal for “Call of Duty” maker Activision Blizzard. This eclipsed the $23.5 billion in cash contributions agreed in December by the wealthiest donor countries to the International Development Association, the World Bank’s fund for the poorest countries – around $8 billion. per year over three years, he said.

“You have to ask yourself, ‘Wait a minute, is this the best capital allocation? “,” Malpass said of the deal with Microsoft. “It’s going to the bond market. You know, a huge amount of[capital]flow is going to the bond market.”

Very little of the developing world has access to this bond financing, while too much capital remains bottled up in advanced countries, especially in central bank reserve assets used to support long-term bond purchases, he added.

A Microsoft spokesperson did not immediately respond to a Reuters request for comment on Malpass’s remarks.

His comments echoed a similar call last week for central banks to reduce their holdings of long-term bonds to free up loan capital.

“It puts you in a situation where a huge amount of capital is being allocated to already capital-intensive parts of the world – the advanced economies – increasingly building on already heavily built infrastructure and real estate, for example” , said Malpass.

In the meantime, a return to more normal global returns is needed to bring more financing capacity to small businesses in the developing world,” he said.

“In order to cope with the flow of refugees, rampant malnutrition, etc., there needs to be more money and growth in developing countries,” Malpass added.