Days after Microsoft's iconic news of its $69B acquisition of game publisher Activision Blizzard, reverberations are still being felt throughout several industries that now includes banking.
World Bank President David Malpass spoke Wednesday at a Peterson Institute for International Economics virtual meeting about the flow and distribution of capital between developed and poorer countries. According to a report from Reuters, Malpass used Microsoft's $89B acquisition as part of his talking point, criticizing the scale of the software company's investment in "capital-intensive parts of the world-- the advanced-- economies."
You have to wonder: 'Wait a minute, is this the best allocation of capital?' This goes to the bond market. You know, a huge amount of (capital) flows are going to the bond market.
A very small portion of the developing world has access to such bond financing, while too much capital remains bottled up in advanced countries, especially in central bank reserve assets used to back long-term bond purchases.
Malpass believes Microsoft's investment could have been better suited to help address the refugee flow, malnutrition and other crisis's plaguing under developed countries.
Coincidentally, World's Bank got a collective agreement from wealthy donor countries to contribute to cash to a fund hosted by the institution itself to the tune of $23.5B that'll work out to $8B contributed annually over the next three years.
On the face of it, Malpass makes several valid arguments. The $69B acquisition deal is the largest of its kind to date and it's happening as several underdeveloped countries struggle with COVID-19, starvation, famine, mass migration, malnutrition, economic instability, and much more. However, Malpass' altruistic criticism comes a week after he also called for central banks to cut long-term bond holdings in favor of availability for short-term lending capital for small businesses as a way to address recent inflation concerns.
For anyone who lived through the 2008 recession, Malpass' mention of loans and lending may have sent a shiver up the spine. Admittedly, there more altruistic ways Microsoft could have spent $69B, we'll just have to wait and see if they begin to match their financial investments with their philanthropic endeavors going forward.
At the time of this write up, Microsoft has not responded to Malpass' criticism of its lavish acquisition and the perception it fosters from underdeveloped countries.