Microsoft execs on TikTok, Nintendo, Apple, and more
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Microsoft's gaming chief on PlayStation 5
From: Phil Spencer
Sent: Wednesday, March 18, 2020 6:55 PM
To: Satya Nadella; Amy Hood
Subject: FW: Sony PS5 Reveal
Even as I type this I know I shouldn't but I can't help myself.
We've all lived with 7 years of starting off a generation with a price and performance (and messaging) disadvantage to PS4 with Xbox One. I have to admit this morning when I woke up knowing the PS5 reveal was today that the stress level was higher than normal. Now after almost 12 hours of soaking in their unveil, taking apart their specs and looking at the community responses I just wanted to say that I'm proud of our team.
We have a better product than Sony does, not just on hardware but equally important on the software platform and services on top of the hardware. We have the ingredients of a winning plan. I felt the feedback from the BoD discussion on being too confident and maybe this will just reinforce that perception, I get the need to be humbly confident but today was a good day for us.
We haven't won anything. And I know we have hard discussion about pricing, P&L, investments etc. This mail isn't trying to scoop any of that, those discussions really matter. But we can take confidence in our product truth here and I do believe any conversation needs to start with believing in that. This was a good day for Xbox.
Thanks for indulging me,
Phil
From: Satya Nadella
To: Phil Spencer; Amy Hood
Sent: 3/19/2020 3:14:46 AM
Subject: RE: Sony PS5 Reveal
This is really great to hear Phil.
Neither of us have announced pricing right?
Thx
Sent from Mail for Windows 10
[This document is from FTC v. Microsoft (2023).]
Previously: Microsoft’s gaming chief: “We are exactly like Polaroid” (February 15, 2019)
Microsoft execs on acquiring TikTok, Nintendo
From: Takeshi Numoto
Sent: Wednesday, August 5, 2020 12:16 PM
To: Phil Spencer; Chris Capossela
Subject: random thought
I get that this whole Tic Tok discussion is happening outside the regular core biz discussions, but it really makes me wonder why we would not find targets like Nintendo more attractive, if we want to find a way to increase our consumer exposure and relevance.
Tic Tok or any other social network seem to have little in the way of hard hitting (not conceptual) adjacencies that would help us accelerate its growth (reason of us being a better owner since it will be banned otherwise, does not feel like a sound logic) or have it accelerate our existing CSAs outside SANE (which is one of our weakest CSAs).
With any existing category, making real inroads into it without sufficient critical mass to begin with seem hard, and I think we all know that you can only do this when there is a macro secular shift that can be exploited (eg -- shift to touch in terms of UEX (Apple and Android), or to cloud in terms of app pattern (Azure is now a much bigger infra tech provider than VMware, formerly king of infra on-prem) etc.).
With gaming, while we have been a consistent #2, we have strong franchise, and a secular shift to the cloud (and perhaps immersive MR/VR over time) that can really help us shift our position (both vis a vis Sony but also Steam). And in this context, it feels like Nintendo has such a rich set of franchises that can help us shore up our content franchises that we can then have accrue to the shift we will likely have to the cloud and to MR/VR over time....(and then perhaps even back to social network given the volume of game viewing as content/community — what if thought about AltSpace as our new social network for next gen immersive games)
I suspect you guys have talked about this multiple times, and I get that there are numerous challenges about this target, but thought I would at least share my musing (since it feels more logical than Tik Toc).
Thanks,
-Takeshi
From: Chris Capossela
Sent: Wednesday, August 5, 2020 12:34 PM
To: Takeshi Numoto; Phil Spencer
Subject: RE: random thought
Great thoughts.
TikTok has really fallen into our lap rather than being something we actively sought out for our consumer business. If you said what is the next best consumer asset that we should spent $10B to $30B on, I don't think we'd say it's TikTok/ But the stars have aligned to give us a chance so we should look hard at pursuing it.
As you know, for each of the solution areas, we have a set of companies we'd love to acquire if the timing and terms were right. They of course have to be willing to sell… and they have to see us as a top company to sell to (like Mojang did). TikTok has not been on any of these lists so I think it's important to realize the current discussions are ones that developed due to geo-political dynamics and the good fortune we have with a strong, trusted brand that make TikTok look to us as a way to avoid being shut out of the US market by the current administration. You can argue if it wasn't on any of our lists why are we entertaining the idea but I think we never envisioned that this could be really possible and this big acquisition opportunities come along so rarely, that we can't afford to not pursue the idea. I completely agree with you that it's not as adjacent as a variety of other prosumer/consumer assets that we might like to buy.
I won't "out" Phil on the list of possible gaming acquisitions that we've shared with the board but I will say they are focused on great content companies that would help us improve the Game Pass catalog, deepen our PC and mobile content and help us in regions of the world where Xbox has had less success to date. There have been lots of rumors recently of Microsoft being in talks with a variety of major content players like Warner Brothers, EA, etc.
Chriscap
From: Phil Spencer
To: Chris Capossela; Takeshi Numoto
Sent: 8/6/2020 12:03:02 AM
Subject: RE: random thought
Takeshi, I totally agree that Nintendo is THE prime asset for us in Gaming and today Gaming is our most likely path to consumer relevance. I’ve had numerous conversations with the LT of Nintendo about tighter collaboration and feel like if any US company would have a chance with Nintendo we are probably in the best position. The unfortunate (or fortunate for Nintendo) situation is that Nintendo is sitting on a big pile of cash, they have a BoD that until recently has not pushed for further increases in market growth or stock appreciation. I say “until recently” as our former MS BoD member ValueAct has been heavily acquiring shares of Nintendo (https://www.reuters.com/article/us-nintendo-valueact-exclusive-idUSKCN2232VT) and I’ve kept in touch with Mason Morfit as he’s been acquiring. It’s likely he will be pushing for more from Nintendo stock which could create opportunities for us. Without that catalyst I don’t see an angle to a near term mutually agreeable merger of Nintendo and MS and I don’t think a hostile action would be a good move so we are playing the long game. But our BoD has seen the full writeup on Nintendo (and Valve) and they are fully supportive on either if opportunity arises as am I.
Confidentially we have two fairly active M&A discussions in Gaming right now, Warner Brothers Interactive and ZeniMax. I took ZeniMax to the BoD last week and prior to the BoD discussion I asked Amy and Satya if they wanted me to slow either or both of these given the TikTok discussions and they both emphatically told me “no”. They are fine doing all 3 of these if the deals make sense. I won’t say WB or Zeni is Nintendo but both are for sale and gettable by us if things align. Biggest obstacle in WB is IP ownership, we wouldn’t own any of the IP which hurts long term flexibility and the only obstacle on Zeni is valuation expectations of founders. But I think it’s likely one or both of these happen which will help us continue to double down on our Gaming relevance. To give a sense of scale, ZeniMax is about the size of our current first party studios org, so that would be doubling our content asset. Downside is it’s more core, less broad, not mobile, more north American/European etc.
I love this discussion and value you looking at the opportunities here. At some point, getting Nintendo would be a career moment and I honestly believe a good move for both companies. It’s just taking a long time for Nintendo to see that their future exists off of their own hardware. A long time.... :-)
Phil
[This document is from FTC v. Microsoft (2023).]
Twitter links: TikTok, Nintendo
"I want to use this tactically vs GOOG/AAPL"
From: Satya Nadella
Sent: Thursday, September 1, 2022 2:17 PM
To: Phil Spencer
Cc: Jon Tinter, Rajesh Jha
Subject: Meta - Quest Event
Hi Phil
On the Meta Quest launch, I would like also demo XCloud.
We don't need to give any firm dates on when we will ship etc.
I want this to be like say Samsung TV like socket for us, when your schedule allows and they have volume.
But I want to make the strategic intent clear.
In my mind the benefits to us are:
I want to make it clear to the world that MSFT is focused on Cloud First approaches — Teams; Win 365; XCloud — as the future of their end user sockets. [REDACTED] But want to basically use every opportunity to make Cloud Streaming more mainstream the better it is for us in the long run for all the strategic reasons we talk about.
I also want to use this tactically vs GOOG/AAPL and their device policies. Not that Meta does not care about Store/IAP etc. But overall have a more fragmented set of device stores/platform is better for us.
Jon is running this deal interface and he will connect with Sarah and Lori on this.
Thx
Satya
Sent from Mail for Windows
[This document is from FTC v. Microsoft (2023).]
Google: “Antitrust Basics for Search Team”
March 2011
[This document is from U.S. v. Google (2023).]
Further reading from Tom Giles and Davey Alba: Googlers Told to Avoid Words Like ‘Share’ and ‘Bundle,’ US Says (September 14, 2023)
Google execs on scale
On Thu, Aug 20, 2009 at 1:21 PM, Gabriel Stricker wrote:
Udi and Marissa,
Time just published its piece on MSFT's Bing efforts, and I hope you'll be as satisfied as I am about how balanced it turned out.
At different points in the piece Farhad questions Bing's "decision engine" positioning and advances our search quality arguments which we raised for him. Examples are here:
... Hal Varian, the company's chief economist, has pointed out that most search engines look at only a small sample of their data in order to improve their results. In other words, Microsoft already has enough data to learn from its users. "It's not the quantity or quality of the ingredients that make a difference. It's the recipes," Varian told CNET. The recipes are Google's proprietary algorithms, which it has slaved over for more than a decade. They're Google's ultimate competitive advantage, and Google believes they'll help it weather the coming assault.
Please just drop me a line if you have any questions or concerns.
On Thu, Aug 20, 2009 at 2:39 PM, Udi Manber wrote:
Congratulations, very nice article. I wish we find a way to downplay Hal's comments, as he was just plain wrong. I know it reads well, but unfortunately it's factually wrong.
-- Udi
On Thu, Aug 20, 2009 at 5:53 PM, Marissa Mayer wrote:
The key issue here as I see it is that you do get better as you have more users - that's why we have the best spell check, the best personalized search, the best refinements, etc. Most people who understand Al or machine learning as well as the size/scale of data would question his assertion/know that it's unlikely.
Also, saying the quality/quantity doesn't matter could be viewed as asserting that index size/comprehensiveness doesn't matter nor does high quality content online. Both of which are not right.
Udi may have other issues, but those are what I see.
[This document is from U.S. v. Google (2023).]
Further reading from Leah Nylen and Davey Alba: Google Trial Spotlights Internal Dispute Over Algorithm vs Data (September 13, 2023)
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