Part of every company is trying to grow both organically or externally which means to buy another company. The senior management examines the strategic plan and finds a company that fits and offers a price that will keep the talent in the company as well as market share. Then the world sees it and makes a judgement, part of the judgement will come from the stock market if the companies are publicly traded, and part will come from the government or regulatory bodies. If you remember the movie Pretty Women staring Richard Gere and Julia Roberts, away from the romance the Richard Gere character was trying to buy a ship building company to sell the assets. One of his negotiation tactics was to say I will tie up the approval for the next ship in the naval appropriations department and you will have no money to build ships. (this is the reason why Senators receive funding from hedge funds, sometimes they are needed to slowdown or speed up the process).

All governments have the ability to regulate and sometimes it seems they go through the motions and the results are a given, but once in a while, the process seems to work.

In an article by Mattt O’Brien of the Associated Press, about 18 months ago, Microsoft offered to buy Activision the maker of video games for $69 billion. A merger of 2 giants meant that regulators had to sign off and the competition wanted to ensure Microsoft would allow Activision games to be played on their systems. The competition is Sony’s Playstation versus Microsoft’s Xbox. The Presidents of Microsoft and Activision agreed to allow Activision to be played on Sony’s Playstation and a US Judge agreed with Microsoft’s case and the merger will go forth.

There are other hurdles to overcome such as the regulators in Europe, but the die is cast for the merger to forward. If you think about the revenues of the movie industry, the gaming industry is bigger. Microsoft has been spending and bulking up on cloud storage for corporate clients and it turns out a large user of the cloud is gaming, so this deal works on many different levels in the world of Microsoft.

Linking to dividend paying stocks, all large companies have legal and government relations staff which work with the government. If the competition is threatening their profit centers, the government relations staff tries to influence legislation to ensure the company maintains its margins. They also find avenues of regulation which the competition has to jump through hoops to fight on the same battlefield. Regulations can be helpful to profitable companies and while they may say they want less regulation, they want more for the competition.

There are more questions than answers, till the next time – to raising questions.