Satya Nadella: Microsoft has “permission to build the next Internet”

Satya Nadella: Microsoft has “permission to build the next Internet”

Enlarge (credit: Financial Times)

Not long after being promoted to the role of chief executive at Microsoft, in 2014, Satya Nadella had faced calls to ditch the tech group’s Xbox games division and concentrate its resources on cloud computing—to compete with rivals, such as Amazon. But instead, Nadella saw an opportunity to build new customer bases through online gaming communities. His first deal as chief executive was buying Minecraft, the three-dimensional world-building game.

At the same time, he further developed Microsoft’s dominant position in personal and business software and expanded its cloud and server offerings. Shares in the group have risen eightfold under Nadella’s tenure, and it remains the world’s largest software group.

However, last month’s $75 billion deal to buy video game maker Activision Blizzard will also make Microsoft the world’s third-biggest gaming company by revenue, behind only China’s Tencent and Japan’s Sony.

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#activision-blizzard, #gaming, #gaming-culture, #interview, #microsoft, #satya-nadella

Microsoft acquires TakeLessons, an online and in-person tutoring platform, to ramp up its edtech play

Microsoft said in January this year that Teams, its online collaboration platform, was being used by over 100 million students — boosted in no small part by the Covid-19 pandemic and many schools going partly or fully remote. Now, it’s made another acquisition to continue expanding its position in the education market.

The company has acquired TakeLessons, a platform for students to connect with individual tutors in areas like music lessons, language learning, academic subjects and professional training or hobbies, and for tutors to book and organize the lessons they give, both online and in person.

Terms of the deal have not been disclosed but we are trying to find out. San Diego-based TakeLessons had raised at least $20 million from a range of VCs and individuals that included LightBank, Uncork Capital, Crosslink Capital and others. TakeLessons posted a short note in the form of a Q&A confirming the deal on its site. The note said that it will continue operating business as usual for the time being, with the intention of taking its platform to a wider global audience.

It’s not clear how many active students and tutors TakeLessons had on its platform at the time of acquisition, but for some context, another big player in the area of online one-to-one tutoring, GoStudent out of Europe, raised $244 million in funding earlier this year that valued it at $1.7 billion. Others in online tutoring like Brainly are also seeing valuations in the hundreds of millions.

Given the relatively modest amount raised by TakeLessons, it’s likely this was a much lower valuation. Yet the acquisition is still one that gives Microsoft the infrastructure and beginnings of setting up a much more aggressive play in mass-market online education, potentially to go head-to-head with these and other big platforms.

TakeLessons today offers instruction in a wide variety of areas, including music lessons (which was where it had gotten its start) through to languages, academic subjects and test prep, computer skills, crafts and more. It has been around since 2006 and got its start first as a platform for people to connect with tutors local to them for in-person lessons, before progressing into online lessons to complement that business.

The pandemic has precipitated a shift to a much bigger wave of the latter, with online tutoring apparently the majority of what is offered on TakeLessons platform today. These lessons continue to be offered on a one-on-one basis, but additionally students can take part in group lessons online via the startup’s Live platform.

The shift to online education that we’ve seen take hold around the world is likely why Microsoft sees a big opportunity here.

On the heels of many schools around the world scrambling for better online learning platforms to manage remote learning during lockdowns and quarantines, educators, families and students have been using (and paying for) a variety of different tools. Within that, Microsoft has been pushing hard to make Teams a leader in that area.

That was built on years of traction already in the market (and a number of other investments and acquisitions that Microsoft has made over the years).

But it also comes amid a new insurgence of competition arising from the current state of affairs. That includes adoption of Google Classroom, as well as a wide variety of more targeted point solutions for specific purposes like video lessons (Zoom figures big here); apps for lesson planning and homework planning; online on-demand tutorials in specific areas like math or languages or science to bolster in-class learning experiences; and more.

The Microsoft way is to bring as many features into a platform as possible to make it more sticky and less likely that users will turn to other apps, providing more value for money around the Microsoft offer. In other words, I’d expect to see Microsoft do more deals and launch more features to cover all of the services that it doesn’t already provide through its educational tools.

(Case in point: my children’s school uses Teams for online lessons, in part because it already uses Outlook for its email system. Now, the school has announced that it will no longer be using a different third-party app for homework planning; instead, teachers will be assigning homework and managing it via Teams. For a cash-strapped state school like ours, it makes sense that it would opt out of paying for two apps when it can get the same features in just one of them. The kids are not happy about this! This is what Microsoft leverages with its platform play.)

NextLessons is somewhat adjacent to that school-focused education strategy. Yes, there will be a big audience of students and their families who might represent a good cross-selling opportunity for tutoring, but NextLessons represents also a more mass-market offering, open to anyone who might want to learn something, not just those already using Microsoft Education products.

So the interest here is likely not just students who want to supplement their online learning — there is a big audience for online tutoring — but any lifelong learner, as well as the many consumers or professionals out there who have gotten interested in learning something new, especially in the last 1.5 years of spending more time alone and/or at home.

And with that, there are other potential opportunities for NextLessons in the Microsoft universe.

Just yesterday, Microsoft CEO Satya Nadella and Ryan Roslansky, the CEO of Microsoft-owned LinkedIn, held an online presentation about what work will look like in the future. Education — specifically professional development — figured strongly in that discussion, with the conversation coinciding with LinkedIn launching a new Learning Hub.

LinkedIn has not only been working for years on building out its education business, but it has also long been looking for a more sticky inroad into doing more with video on its platform.

Something like NextLessons could, interestingly, kill those two birds with one stone. While LinkedIn’s education content up to now has not been something specifically tied to “live” online lessons, you could imagine a bridge between Microsoft’s latest acquisition and what LinkedIn might consider next, too.

#articles, #ceo, #crosslink-capital, #e-learning, #education, #europe, #google, #leader, #learning, #lightbank, #linkedin, #ma, #microsoft, #online-education, #online-learning, #online-tutoring, #ryan-roslansky, #san-diego, #satya-nadella, #takelessons, #teaching, #tutoring, #uncork-capital

For tech firms, the risk of not preparing for leadership changes is huge

Every week over the past three and a half years, an average of three CEOs have exited tech companies in the U.S. That tally is higher — in good times and bad — than in any of the other 26 for-profit sectors tracked by executive search firm Challenger, Gray & Christmas. You’d think tech companies should be the paradigm of how to prep for leadership transitions, since they operate in such a constant state of flux.

They’re far from it.

A change of command is one of the most delicate moments in the life cycle of any organization. If mishandled, the transition from one CEO to the next can result in a loss of market valuation, momentum and focus, as well as key personnel, customers and partners. It may even become that turning point when an organization begins to slide toward irrelevance.

With so much at stake, 84% of tech execs agree that succession planning is more important than ever because of today’s fast-changing business environment, according to our new survey of corporate America’s leaders. Seven out of 10 survey respondents agreed that tech companies face more scrutiny than other multinationals during a transition.

84% of tech execs agree that succession planning is more important than ever because of today’s fast-changing business environment.

Yet we found that tech execs appear just as unprepared for C-suite transitions as their peers in other sectors. Three out of five respondents said their companies don’t have a documented plan to handle a leadership change, even though, by that same ratio, they acknowledge that a documented plan is the biggest determinant in seamless transitions.

The findings may not be troubling if these respondents were millennial startup founders, years from leaving their companies. The executives we polled, however, hail from 160 companies that have been in business for a minimum of 15 years — 35 are tech companies, the largest industry cohort in the survey.

The smallest companies have at least 1,500 employees and $500 million in annual revenue, while the largest have head counts of over 500,000 and revenue upward of $100 billion. They have been around long enough to understand — and put into place — risk management and crisis planning, including what happens should their leaders fall victim to the proverbial milk truck.

Tech execs should be more rigorous about succession planning for one important reason: institutional memory. Tech firms generally are younger than other companies of a similar size, which partly explains why the median age of S&P 500 companies plunged to 33 years in 2018 from 85 years in 2000, according to McKinsey & Co.

These enterprises clearly have accomplished a lot in their short lives, but in their haste, most have not captured their history, unlike their longer-lived peers in other sectors. Less than half of these tech firms, in fact, have formally recorded their leader’s story for posterity. That puts them at a disadvantage when, inevitably, they will be required to onboard newcomers to their C-suites.

It’s best to record this history well before the intense swirl of a leadership transition begins. Crucially, it will help the incoming and future generations of leadership understand critical aspects of its track record, the lessons learned, culture and identity. It also explains why the organization has evolved as it has, what binds people together and what may trigger resistance based on previous experience. It’s as much about moving forward as looking back.

Most execs in our poll get it, with 85% saying a company’s history can be a playbook for new executives to learn and prepare for upcoming challenges and opportunities. “History is the mother of innovation for any type of company,” one respondent said. “History,” writes another, “includes the roadmap to failures as well as successes.”

But this documented history cannot be a hagiography of the departing CEO. Too often, outgoing execs spend their last years in office constructing their own trophy cases. Even as they conceded their own flat-footedness on transition planning, the majority of execs said they have already taken steps to create and reinforce their personal legacies — two-thirds said they have already completed their own formal legacy planning, many with the blessing of their boards.

It’s ironic, then, that three out of five also said that the legacy of a CEO or founder often overshadows the skill set and experience a successor brings. Two-thirds of tech execs believed that the longer a leader has been in office, the more it complicates a transition.

Tech leaders can do this right and have done so. Asked which five big-name CEO transitions was most successful, respondents’ No. 1 was Apple’s handoff from Steve Jobs to Tim Cook (38%), followed by Microsoft’s page-turn from Steve Ballmer to Satya Nadella (28%). The others, at General Electric, General Motors and Goldman Sachs, each netted no more than 13% of votes.

Apple’s apparent predominance in this survey might contradict the advice to play down the aggrandizement of an exiting CEO and highlight the compilation and transfer of an organization’s history to the next chief executive. Jobs, after all, painstakingly managed his legacy until the end. But even as he continued to take center-stage, he also made sure to pass along Apple’s institutional knowledge and ethos to Cook over the 13 years they shared space on Apple’s executive floor.

Sooner or later, everyone in the C-suite today — including startup founders — will depart. For the sake of everyone they’ll leave behind, they should begin prepping for that day now.

#column, #entrepreneurship, #goldman-sachs, #human-resource-management, #leadership-tactics, #opinion, #personnel, #planning, #satya-nadella, #startups, #tim-cook

Facebook’s next product will be its long-awaited Ray-Ban smart glasses

Facebook’s booming business is dominated by digital ads, but it also has hardware ambitions beyond VR. During the company’s latest earnings call, CEO Mark Zuckerberg said its next product release would be a pair of smart glasses from Ray-Ban.

“The glasses have their iconic form factor, and they let you do some pretty neat things,” the Facebook co-founder said. “So I’m excited to get those into people’s hands and to continue to make progress on the journey toward full augmented reality glasses in the future.”

Facebook’s sunglasses have been the subject of rumors since 2019. Back then, sources told CNBC that Facebook was working with Ray-Ban owner EssilorLuxottica on AR eyewear nicknamed “Orion.” The glasses were billed as a full-fledged phone replacement on which you could take calls, see information and even broadcast livestreams. That inevitably drew comparisons to Google Glass (another Luxottica collab) instead of the phone-tethered Spectacles from Snap. Last year, Hugo Barra, then VP VR at Facebook Reality Labs, confirmed that the glasses would land in 2021. But, we haven’t heard much since.

For Facebook, the glasses hold the key to its future. Alongside virtual reality, augmented reality (AR) is integral to building the “metaverse,” Zuckerberg said. In the future, Facebook will morph into a shared, liveable platform that lets you “teleport” between different social experiences using VR and AR, Zuckerberg explained.

The term metaverse is the latest buzzword seized upon by Silicon Valley and futurists. While the concept has been around for well over a decade, it gained traction after the breakout success of multiplayer game creation platforms like Fortnite and Roblox. Earlier this week, Microsoft chief Satya Nadella mentioned an “enterprise metaverse” on his company’s earnings call.

For Facebook, the metaverse is more than just a fad. The company is spending billions in order to build its shared universe, which will be populated with Facebook users and digital ads, according to Zuckerberg. In order for it to become a reality, the company needs more people to buy its computing hardware. Therefore, the plan is to make those devices more affordable.

“Our business model isn’t going to primarily be around trying to sell devices at a large premium or anything like that because our mission is around serving as many people as possible,” Zuckerberg noted. “So we want to make everything that we do as affordable as possible, so as many people as possible can get into it and then compounds the size of the digital economy inside it. So that’s kind of at a high level how I’m thinking about this.”

Sunglasses aren’t the only hardware Facebook is reportedly working on. Multiple reports have claimed Facebook is developing a smartwatch with a built-in cellular connection and a detachable display. Initially, it was believed that the watch would be first out the gate, but it seems Zuckerberg had other plans.

Editor’s note: This post originally appeared on Engadget.

#facebook, #google, #hugo-barra, #mark-zuckerberg, #microsoft, #oculus, #roblox, #satya-nadella, #tc

Microsoft bests earnings estimates as Azure posts 51% growth; shares fall

Today after the bell, Microsoft reported its fiscal Q4 2021 earnings, the period corresponding to the second calendar quarter of this year. Microsoft posted revenues of $46.2 billion in the period, along with net income of $16.5 billion and earnings per share of $2.17. The company’s revenues grew by 21% compared to the year-ago quarter, while its net income expanded by a more toothsome 47% over the same time frame.

The company’s results beat expectations, which Yahoo Finance reports were revenues of $44.1 billion and earnings per share of $1.90. Shares of the software giant fell after the news, perhaps due to the company’s results missing so-called whisper numbers; that Microsoft has traded at or near all-time highs in recent sessions puts the current 3% after-hours drop into context. Tech shares were broadly weaker in regular trading today, a session in which Microsoft shed just under 1% of its worth.

Microsoft is so large a company that its top-level results are hardly clear, so let’s dig in a little more.

First up, Azure, Microsoft’s cloud computing platform, posted 51% revenue growth in the quarter compared to the corresponding year-ago quarter, a figure that would dip to 45% if one was to remove currency fluctuations, according to the company. The 51% figure, per initial analysis, is the company’s best Azure growth result since its fiscal Q3 2020 quarter, or the first calendar quarter of last year.

From that perspective, it’s hard to fault Azure’s growth over the last three months.

Picking through the rest of the company’s results, we can rank its three main divisions’ revenue growth results as follows:

  • Intelligent Cloud: 30% growth, a figure driven in part by Azure’s growth;
  • Productivity and Business Processes: 21% growth, led by LinkedIn (46% growth), and the Dynamics 365 CRM product (49% growth);
  • More Personal Computing: 9% growth, led by search growth (53%, excluding traffic acquisition costs)

The weaker spots in the larger Redmond revenue review are not hard to spot. Office Consumer revenue expanded by 18%, a figure that feels somewhat modest; Windows OEM revenue slipped by 3%; and Surface revenue fell 20%.

But those lowlights were not enough to derail the company’s aggregate growth picture and titanic profitability. How profitable is Satya Nadella’s company? Microsoft spent $10.4 billion on share buybacks and dividends in its most recent quarter. That’s a somewhat confusing amount of money, frankly. And at this point, we’re a bit flummoxed why Microsoft is buying back shares. Its market capitalization is a bit more than $2 trillion, implying that at best the company can gently chip away at its share count over time at huge expense. Surely there is a better use for its cash?

Regardless, the company’s results indicate that the recent run of big technology companies posting impressively large and lucrative results is not behind us. That may help provide investor confidence for technology companies more broadly. Which, you know, would not be a bad thing for startups.

#azure, #cloud-computing, #earnings, #linkedin, #microsoft, #satya-nadella

Microsoft launches Windows 365

Microsoft today launched Windows 365, a service that gives businesses the option to easily let their employees access a Windows 10 desktop from the cloud (with Windows 11 coming once it’s generally available). Think game streaming, but for your desktop. It’ll be available for business users (and only business users), on August 2, 2021.

Announced through a somewhat inscrutable press release, Windows 365 has been long expected and is really just an evolution of existing remote desktop services.

But hey, you may say, doesn’t Microsoft already offer Azure Virtual Desktop that gives businesses the option to let their employees access a Windows PC in the cloud? Yes, but the difference seems to be that Windows 365 is far easier to use and involves none of the complexity of setting up a full Azure Virtual Desktop environment in the Azure cloud.

But couldn’t Microsoft have made Azure Virtual Desktop easier to use instead of launching yet another virtual desktop service? Yes, but Azure Virtual Desktop is very much an enterprise service and by default, that means it must play nicely with the rest of the complexities of a company’s existing infrastructure. The pandemic pressed it into service in smaller companies because they had few alternatives, but in many ways, today’s launch is Microsoft admitting that it was far too difficult to manage for them. Windows 365, on the other hand, is somewhat of a fresh slate. It’s also available through a basic subscription service.

“Microsoft also continues to innovate in Azure Virtual Desktop for those organizations with deep virtualization experience that want more customization and flexibility options,” the company says. At least we know why the company renamed Windows Virtual Desktop to Azure Virtual desktop now. That would’ve gotten quite confusing.

Image Credits: Microsoft

This also gives Microsoft the opportunity to talk about “a new hybrid personal computing category” its CEO Satya Nadella calls a ‘Cloud PC.’ It’s a bit unclear what exactly that’s supposed to be, but it’s a new category.

“Just like applications were brought to the cloud with SaaS, we are now bringing the operating system to the cloud, providing organizations with greater flexibility and a secure way to empower their workforce to be more productive and connected, regardless of location,” Nadella explains in today’s press release.

But isn’t that just a thin client? Maybe? But we’re not talking hardware here. It’s really just a virtualized operating system in the cloud that you can access from anywhere — and that’s a category that’s been around for a long time.

“Hybrid work has fundamentally changed the role of technology in organizations today,” said Jared Spataro, corporate vice president, Microsoft 365. “With workforces more disparate than ever before, organizations need a new way to deliver a great productivity experience with increased versatility, simplicity and security. Cloud PC is an exciting new category of hybrid personal computing that turns any device into a personalized, productive and secure digital workspace. Today’s announcement of Windows 365 is just the beginning of what will be possible as we blur the lines between the device and the cloud.”

 

 

#ceo, #cloud, #cloud-infrastructure, #computing, #jared-spataro, #microsoft, #microsoft-365, #microsoft-windows, #operating-system, #satya-nadella, #tc, #technology, #thin-client, #thin-clients, #windows, #windows-10

Is overseeing cloud operations the new career path to CEO?

When Amazon announced last week that founder and CEO Jeff Bezos planned to step back from overseeing operations and shift into an executive chairman role, it also revealed that AWS CEO Andy Jassy, head of the company’s profitable cloud division, would replace him.

As Bessemer partner Byron Deeter pointed out on Twitter, Jassy’s promotion was similar to Satya Nadella’s ascent at Microsoft: in 2014, he moved from executive VP in charge of Azure to the chief exec’s office. Similarly, Arvind Krishna, who was promoted to replace Ginni Rometti as IBM CEO last year, also was formerly head of the company’s cloud business.

Could Nadella’s successful rise serve as a blueprint for Amazon as it makes a similar transition? While there are major differences in the missions of these companies, it’s inevitable that we will compare these two executives based on their former jobs. It’s true that they have an awful lot in common, but there are some stark differences, too.

Replacing a legend

For starters, Jassy is taking over for someone who founded one of the world’s biggest corporations. Nadella replaced Steve Ballmer, who had taken over for the company’s face, Bill Gates. Holger Mueller, an analyst at Constellation Research, says this notable difference could have a huge impact for Jassy with his founder boss still looking over his shoulder.

“There’s a lot of similarity in the two situations, but Satya was a little removed from the founder Gates. Bezos will always hover and be there, whereas Gates (and Ballmer) had retired for good. [ … ] It was clear [they] would not be coming back. [ … ] For Jassy, the owner could [conceivably] come back anytime,” Mueller said.

But Andrew Bartels, an analyst at Forrester Research, says it’s not a coincidence that both leaders were plucked from the cloud divisions of their respective companies, even if it was seven years apart.

“In both cases, these hyperscale business units of Microsoft and Amazon were the fastest-growing and best-performing units of the companies. [ … ] In both cases, cloud infrastructure was seen as a platform on top of which and around which other cloud offerings could be developed,” Bartels said. The companies both believe that the leaders of these two growth engines were best suited to lead the company into the future.

#amazon, #andy-jassy, #aws, #azure, #cloud, #ec-cloud-and-enterprise-infrastructure, #ec-news-analysis, #enterprise, #jeff-bezos, #microsoft, #personnel, #satya-nadella, #tc

Microsoft launches Viva, its new take on the old intranet

Microsoft today launched Viva, a new “employee experience platform,” or, in non-marketing terms, its new take on the intranet sites most large companies tend to offer their employees. This includes standard features like access to internal communications built on integrations with SharePoint, Yammer and other Microsoft tools. In addition, Viva also offers access to team analytics and an integration with LinkedIn Learning and other training content providers (including the likes of SAP SuccessFactors), as well as what Microsoft calls Viva Topics for knowledge sharing within a company.

If you’re like most employees, you know that your company spends a lot of money on internal communications and its accompanying intranet offerings — and you then promptly ignore that in order to get actual work done. But Microsoft argues that times are changing, as remote work is here to stay for many companies, even after the pandemic (hopefully) ends. Even if a small percentage of a company’s workforce remains remote or opts for a hybrid approach, those workers still need to have access to the right tools and feel like they are part of the company.

Image Credits: Microsoft

“We have participated in the largest at-scale remote work experiment the world has seen and it has had a dramatic impact on the employee experience,” Microsoft CEO Satya Nadella said in a pre-recorded video. “As the world recovers, there is no going back. Flexibility in when, where and how we work will be key.”

He argues that every organization will require a unified employee experience platform that supports workers from their onboarding process to collaborating with their colleagues and continuing their education within the company. Yet as employees work remotely, companies are now struggling to keep their internal culture and foster community among employees. Viva aims to fix this.

Unsurprisingly, Viva is powered by Microsoft 365 and all of the tools that come with that, as well as integrations with Microsoft Teams, the company’s flagship collaboration service, and even Yammer, the employee communication tool it acquired back in 2012 and continues to support.

There are several parts to Viva: Viva Connections for accessing company news, policies, benefits and internal communities (powered by Yammer); Viva Learning for, you guessed it, accessing learning resources; and Viva Topics, the service’s take on company-wide knowledge sharing. For the most part, that’s all standard fair in any modern intranet, whether it’s from a startup provider or an established player like Jive.

Viva Insights feels like the odd one out here, especially after Microsoft’s kerfuffle around its Productivity Score. The idea here is to give managers insights into whether their team (but not individual team members) are at risk of burnout, for example, in order to encourage them to turn off notifications or set daily priorities (a good manager, I’d hope, could do this without analytics, but here we are, in 2021). It’s also meant to help company leaders “address complex challenges and respond to change by shedding light on organizational work patterns and trends.” Sure.

Because this is Microsoft in 2021, there’s also a lot of talk about employee well-being in today’s announcement. For most employees, that means fewer meetings, more focus time and turning off notifications after work. Obviously there are technical tools to help with that, but it’s really a question of company culture and management. I’m not sure you need analytics integrated with LinkedIn’s Glint for that, but you can now have those, too.

“As the world of work changes, the next horizon of innovation will come from a focus on creativity, engagement and well-being so organizations can build cultures of resilience and ingenuity,” said Jared Spataro, corporate vice president, Microsoft 365. “Our vision is to deliver a platform for the employee experience that helps organizations create a thriving culture with engaged employees and inspiring leaders.”

#computing, #enterprise, #human-resource-management, #intranet, #linkedin, #microsoft, #microsoft-viva, #recruitment, #satya-nadella, #sharepoint, #software, #successfactors, #yammer

Microsoft earnings: Xbox hardware sales shot up 86% with Series X/S

The Xbox Series X, which launched in November.

Enlarge / The Xbox Series X, which launched in November. (credit: Sam Machkovech)

Microsoft delivered its earnings report for Q2 2021 yesterday, and the company has continued its sprint of very strong quarters, again driven primarily by Azure and the cloud. But that same old story isn’t the only one here: the report also tells us a thing or two about the new Xbox’s performance, as well as Windows and Office.

Overall, Microsoft beat analyst expectations. The company’s top-level revenue grew 17 percent year over year, reaching $43.08 billion. Analysts had expected $40.18 billion. $14.6 billion of that was from the business segment Microsoft calls “Intelligent Cloud,” which most notably includes Azure but also some other professional services like GitHub.

Cloud wasn’t the only positive story, though. Personal Computing including Windows, Xbox, and Surface grew 15 percent compared to the previous year to just over $15 billion. That included an 86 percent increase in Xbox hardware sales, as well as a 40 percent increase in Xbox content and surfaces—the former of those includes the launch of the Xbox Series X/S consoles in November, and the latter includes Game Pass, which Microsoft has been pushing hard as a core value proposition for the Xbox game platform.

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#earnings, #microsoft, #microsoft-azure, #office, #satya-nadella, #tech, #windows, #xbox

What Microsoft should demand in exchange for its ‘payment’ to the US government for TikTok

In one of the crazier news stories (and in 2020, that is saying something), President Donald Trump said today during a media availability that in order for the U.S. government to sign off on a potential Microsoft/TikTok deal, “a very substantial portion of that price is going to have to come into the Treasury of the United States,” based on my colleague Alex Wilhelm’s rough transcript.

That seems nearly impossible to actually execute in reality (corporations don’t just quote-unquote bribe the U.S. government to get their docs signed), but let’s actually take it at face value: should Microsoft pay, and if so, what should they demand in any bargain with the U.S. government?

First and foremost, some context. ByteDance, TikTok’s parent company, has been valued over $100 billion. ByteDance owns a suite of apps, including TikTok’s China-focused and extraordinarily popular sister app Douyin as well as Toutiao, an extremely successful news reader, so teasing out TikTok’s valuation by itself is difficult. Adding to the ambiguity is the regulatory chaos of the deal, and the fact that many big-pocketed buyers like Facebook are out of the running on straight antitrust grounds.

So let’s say for illustration that the price is at least $10 billion, if not tens of billions of dollars. How should Microsoft be thinking about a negotiation with the government here?

The overriding objective should be reducing Microsoft’s post-acquisition regulatory headaches. TikTok has well-documented privacy problems, which also involve teens — an area where regulations are acutely sensitive. When Facebook faced privacy problems on its own platform, it finally agreed to a settlement of $5 billion last year with the Federal Trade Commission to unify all the different cases and bring them to a conclusion. It also agreed to a set of restrictions as well as a monitoring mechanism to ensure compliance. TikTok (formerly Musical.ly) actually agreed to an FTC privacy settlement of $5.7 million last year.

On top of privacy, you have the export licensing issues from Treasury, data protection concerns on Capitol Hill due to the app’s China provenance, and potential antitrust issues from Justice.

So, it’s time to cut a deal. Offer the U.S. government a beefy sum — perhaps even a few billion depending on the final purchase price — as a “settlement fine” in exchange for immunity to all claims regarding privacy, trade, and antitrust regulations prior to TikTok’s acquisition. Perhaps have a setup where Microsoft has 180 days post-acquisition to clear up privacy issues, move data to presumably its own Azure cloud in the United States, and put in even better parental controls than TikTok has already introduced in the past few months.

Far from being an atrocious setup, this could massively limit Microsoft’s long-term liabilities, and also allow the company to avoid a lot of the escrow and holdbacks typical of large M&A deals, where an acquirer will not pay out the full acquisition price upfront lest future lawsuits bear significant costs.

It’s terrible for the President himself to get involved in such a matter in such a direct and indelicate way. But now that President Trump has opened the door — it’s actually perhaps not as bad of a path forward as it looks like at first glance. He has the power to push for an inter-agency process, line up all the government stakeholders, and accept a level of immunity in exchange for a “fine.”

A settlement can’t solve every problem. TikTok, like all internet apps in the United States, is not just governed by federal law but also by state laws around privacy, such as the California Consumer Privacy Act. A settlement with the federal government may still conflict with relevant state laws. In addition, agreeing to a large payment in the heart of election season would be deeply controversial, possibly on both sides of the aisle.

Nonetheless, this deal is by no means typical, and no one should think it will have a typical M&A process. While few lawyers would recommend engaging with the federal government over what is effectively a strange form of highway robbery — there are decent fiduciary reasons to just pay the toll, acquire some liability protection and move on.

#apps, #bytedance, #donald-trump, #government, #microsoft, #policy, #satya-nadella, #tiktok

Microsoft pursuing TikTok purchase by September 15th, may invite U.S. investors to deal

Microsoft has posted a statement today on its corporate blog that says it will continue discussions on a potential TikTok purchase in the U.S.. As a part of the statement, it says that it may invite other “American investors” to participate on a minority basis.

The company says that this is a result of conversations between CEO Satya Nadella and President Trump. That is, basically, the ‘news’ here. Previous reports and our own digging pointed to the situation being totally in the hands of the White House, with Microsoft willing to make the buy but having roadblocks in the form of Presidential sentiment. If Satya has engaged Trump directly then there could be light at the end of this possibility tunnel after all.

“Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok in the United States,” the statement reads. “Microsoft fully appreciates the importance of addressing the President’s concerns. It is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.”

Microsoft says that in any case their discussions about acquisition from ByteDance would complete no later than September 15th, 2020 and that it is keeping discussion ongoing with the President and the U.S. government.

The purchase would cover TikTok operations in the U.S., Canada, Australia and New Zealand and would result in Microsoft owning and operating it in those markets. One region not mentioned here is India, which could provide an interesting future opportunity for both companies if this deal goes down. If Microsoft can position itself as a steward of TikTok it removes the data issue (if not the over-arching national tensions between China and India).

Unsurprisingly, data and privacy protections ​make an appearance, with Microsoft assuring that “the operating model for the service would be built to ensure transparency to users as well as appropriate security oversight by governments in these countries.”

“Among other measures, Microsoft would ensure that all private data of TikTok’s American users is transferred to and remains in the United States. To the extent that any such data is currently stored or backed-up outside the United States, Microsoft would ensure that this data is deleted from servers outside the country after it is transferred.”

The historical here (if you can call it that because this whole thing has been the work of but a couple weeks tops) is that Microsoft is pursuing TikTok because ByteDance needs to divest it in order to keep it running in the U.S., one of its biggest markets. That need arose when the White House decided that it was important to make a stink about data sovereignty with relation to the China-owned network. Even though social services of many kinds including Facebook, Twitter, Google and others offer aggregate data in brokerages that can make deals globally, the opportunity to run up the anti-China flag and take aim at an easy target — an app that undoubtedly has access to an enormous amount of behavioral data on U.S. citizens.

And then there’s the fun Twitter theory that Trump just got pissed at a comedian who got very popular making fun of him on the platform.

Anyway, now we have another tock in the TikTok ticking clock. We’ll reach out to all parties but this looks like it may be the final result of this weekend’s flurry of news on this. We’ll see you Monday morning.

#business, #ceo, #donald-j-trump, #donald-trump, #industries, #microsoft, #nadella, #president, #satya-nadella, #tc, #tiktok, #united-states

Magic Leap has a new chief executive and it’s former Microsoft exec Peggy Johnson

Peggy Johnson, the former executive vice president of business development at Microsoft, has been named as the new chief executive of Magic Leap, the company said in a statement.

Johnson, who will begin her new role on August 1, 2020, comes to Magic Leap after a thirty year career in the technology industry.

It’s been a tumultuous 2020 for Magic Leap. Struggling to survive amid a cash crunch and facing bankruptcy, the company laid off most of its staff in April and was casting around for a white knight investor to come in and keep the company afloat. While the Paradise, Fla.-based company found the $375 million in funding it needed, according to The New York Times, that investment came at the price of Rony Abovitz’s position as chief executive.

Abovitz, whose vision for the future of spatial computing managed to rake in over a billion dollars in funding, was a consummate hype man whose products failed to deliver on the promise they’d held.

In Johnson Magic Leap has a proven executive who joined Microsoft in 2014 from Qualcomm as an executive hire made by chief executive Satya Nadella. There, she ran business development and had a hand in a number of the company’s major acquisitions and partnerships including the $26.2 billion blockbuster acquisition of LinkedIn . The 58 year-old Johnson also launched Microsoft’s venture capital fund (known as M12).

At Magic Leap, Johnson will take the reins of a company whose direction has shifted to focus more on businesses than on consumers — a strategy that mirrors approaches taken both by Microsoft’s Hololens extended reality product and by early wearable tech progenitor Google Glass.

It’s also a company that managed to burn through nearly $3.5 billion under Abovitz’s stewardship and lose a valuation of

“Since its founding in 2011, Magic Leap has pioneered the field of spatial computing, and I have long admired the relentless efforts and accomplishments of this exceptional team. Magic Leap’s technological foundation is undeniable, and there is no question that has the potential to shape the future of XR and computing,” said Ms. Johnson.

Before joining Microsoft, Ms. Johnson spent 24 years at Qualcomm, where she held various leadership positions, and served as a member of Qualcomm’s Executive Committee.

“As a company that has been a leader in transforming what will become the next era of computing, we have been fortunate to have a number of extremely qualified candidates express interest in the position of CEO. However, as soon as Peggy raised her hand there was no question in my mind, or the Board’s, that she was absolutely the best person to lead this company into the future,” said Abovitz in a statement. “As Magic Leap drives towards commercializing spatial computing for enterprise, I can’t think of a better and more capable leader than Peggy Johnson to carry our mission forward.”

 

#linkedin, #magic-leap, #microsoft, #mixed-reality, #peggy-johnson, #qualcomm, #rony-abovitz, #satya-nadella, #tc, #the-new-york-times, #wearable-devices

Top cybersecurity VCs share how COVID-19 has changed investing

The coronavirus pandemic is, without doubt, the greatest challenge the world has faced in a generation. But the wheels of the world keep turning, albeit slower than during normal times.

But where the world has faced challenges, the cybersecurity industry remains largely unscathed. In fact, some cybersecurity businesses are doing better than ever because cybersecurity has emerged as one of the few constants we all need — even during a pandemic.

The vast majority of the global workforce is (or has been) working from home since the start of the lockdown, and the world had to quickly adjust. Tech companies pushed their technology and services to the cloud. Businesses had to shift from not just securing their office network but also preventing threats against their highly distributed employees working from their own homes. And, hackers are retooling their attacks to be coronavirus themed, making them far more likely to succeed.

All of these things — and more — need security. Or, as one investor told us: “Many of these trends were already underway, but COVID-19 is an accelerant.” That’s helped cybersecurity firms weather the storm of this pandemic.

We spoke to a dozen cybersecurity VCs to hear their thoughts on how COVID-19 has changed the investment landscape:

Here’s what they told us. (Answers have been edited for clarity.)

Ariel Tseitlin, Scale Venture Partners

Security budgets haven’t been affected nearly as much as broader IT spend. We continue to see existing portfolio companies raise follow-on financings, and we continue to meet with companies for new potential investments. The big change in my criteria for new investments is that a company must be able to continue growing in the current environment. We don’t know how long this downturn will last, so I don’t buy into the promise of “as soon as the economy recovers, growth will resume.”

Shardul Shah, Index Ventures

On Microsoft’s last earnings call, chief executive Satya Nadella said: “As COVID-19 impacts every aspect of our work and life, we have seen two years worth of digital transformation in two months.” This acceleration has actually created momentum for a number of cybersecurity businesses, which is why the best companies continue to draw significant interest from investors. I serve on the board of security firm Expel, which raised $50 million in the middle of this crisis.

#cloud-infrastructure, #collaboration-tools, #computer-security, #coronavirus, #covid-19, #crowdstrike, #cryptography, #cybercrime, #cyberwarfare, #dharmesh-thakker, #digital-transformation, #energy-impact-partners, #expel, #extra-crunch, #funding, #information-age, #investor-surveys, #microsoft, #sarah-guo, #satya-nadella, #scale-venture, #security, #streaming-video, #theresia-gouw, #venture-capital, #video-conferencing

Microsoft acquires robotic process automation platform Softomotive

During his Build keynote, Microsoft CEO Satya Nadella today confirmed that the company has acquired Softomotive, a software robotic automation platform. Bloomberg first reported that this acquisition was in the works earlier this month, but the two companies didn’t comment on the report at the time.

Today, Nadella noted that Softomotive would become part of Microsoft’s Power Automate platform. “We’re bringing RPA – or robotic process automation to legacy apps and services with our acquisition of Softomotive,” Nadella said.

Softomotive currently has about 9,000 customers around the world. Softomotive’s WinAutomation platform will be freely available to Power Automate users with what Microsoft calls an RPA attended license in Power Automate.

In Power Automate, Microsoft will use Softomotive’s tools to enable a number of new capabilities, including Softomotives low-code desktop automation solution WinAutomation. Until now, Power Automate did not feature any desktop automation tools.

It’ll also build Softomotive’s connectors for applications from SAP, as well as legacy terminal screens and Java, into its desktop automation experience and enable parallel execution and multitasking for UI automation.

Softomotives other flagship application, ProcessRobot for server-based enterprise RPA development, will also find a new home in Power Automate. My guess, though, is that Microsoft mostly bought the company for its desktop automation skills.

“One of our most distinguishing characteristics, and an indelible part of our DNA, is an unswerving commitment to usability,” writes Softomotive CEO and co-founder Marios Stavropoulos. “We have always believed in the notion of citizen developers and, since less than two percent of the world population can write code, we believe the greatest potential for both process improvement and overall innovation comes from business end users. This is why we have invested so diligently in abstracting complexity away from end users and created one of the industry’s most intuitive user interfaces – so that non-technical business end users can not just do more, but also make deeper contributions by becoming professional problem solvers and innovators. We are extremely excited to pursue this vision as part of Microsoft.”

The two companies did not disclose the financial details of the transaction.

#articles, #artificial-intelligence, #automation, #business, #business-software, #ceo, #microsoft, #microsoft-build-2020, #robotic-process-automation, #satya-nadella, #tc, #technology

Microsoft to open first data center in New Zealand as cloud usage grows

In spite of being in the midst of a pandemic sowing economic uncertainty, one area that continues to thrive is cloud computing. Perhaps that explains why Microsoft, which saw Azure grow 59% in its most recent earnings report, announced plans to open a new data center in New Zealand once it receives approval from the Overseas Investment Office.

“This significant investment in New Zealand’s digital infrastructure is a testament to the remarkable spirit of New Zealand’s innovation and reflects how we’re pushing the boundaries of what is possible as a nation,” Vanessa Sorenson, general manager at Microsoft New Zealand said in a statement.

The company sees this project against the backdrop of accelerating digital transformation that we are seeing as the pandemic forces companies to move to the cloud more quickly with employees often spread out and unable to work in offices around the world.

As CEO Satya Nadella noted on Twitter, this should help companies in New Zealand that are in the midst of this transformation. “Now more than ever, we’re seeing the power of digital transformation, and today we’re announcing a new datacenter region in New Zealand to help every organization in the country build their own digital capability,” Nadella tweeted.

The company wants to do more than simply build a data center. It will make this part of a broader investment across the country, including skills training and reducing the environmental footprint of the data center.

Once New Zealand comes on board, the company will boast 60 regions covering 140 countries around the world. The new data center won’t just be about Azure, either. It will help fuel usage of Office 365 and the Dynamics 365 back-office products, as well.

#azure, #cloud, #data-centers, #dynamics-365, #enterprise, #microsoft, #new-zealand, #office-365, #satya-nadella

Microsoft opens registration for its free, online Build 2020 developer conference

Microsoft has now opened registration for the virtual edition of its online-only Build 2020 developer conference, which will take place from May 19 to 20.

Typically, the event draws more than 6,000 developers, but because of the coronavirus pandemic, that’s obviously not an option. In contrast to Google, which completely scrapped its I/O developer conference this year, Microsoft decided to go ahead with the virtual event. But this will be a very different kind of Build — and not only because it’s online-only.

Not only will the keynotes be shorter (though there will still be Day 1 and Day 2 keynotes), but in response to feedback from developers who have attended previous events, the Microsoft team also decided to focus solely on that audience. In previous years, Microsoft often used Build to announce consumer products, just like Google does at I/O. But that won’t happen this year. And instead of using the keynotes to put an early spotlight on features that won’t be available for half a year or more, the event will be more about providing content that’s immediately useful for developers and new products that are either immediately available or only a couple of months out from getting into the hands of developers.

That also likely means that even though Microsoft CEO Satya Nadella will still keynote, there will be less talk about big-picture company philosophy and more about developer tools and APIs.

Some of the keynotes and demos will be live, some will be pre-recorded, but overall, the look and feel of the event shouldn’t be all that different from what developers who previously watched Build from afar experienced. But it will be shorter and more focused than in previous years, which isn’t necessarily a bad thing.

Attendees sit in pods during the Microsoft Developers Build Conference in Seattle, Washington, U.S., on Monday, May 7, 2018. The Build conference, marking its second consecutive year in Seattle, is expected to put emphasis on the company’s cloud technologies and the artificial intelligence features within those services. Photographer: Grant Hindsley/Bloomberg via Getty Images

#business, #companies, #consumer-products, #developer, #developer-tools, #events, #google, #industries, #microsoft, #microsoft-build, #satya-nadella, #tc