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World Bank chief takes swipe at Microsoft's $69 billion gaming deal as poor countries struggle

Stock MarketsJan 19, 2022 08:56PM ET
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© Reuters. FILE PHOTO: World Bank President David Malpass attends the UN Climate Change Conference (COP26) in Glasgow, Scotland, Britain, November 3, 2021. REUTERS/Yves Herman

By David Lawder

WASHINGTON (Reuters) - World Bank President David Malpass on Wednesday criticized Microsoft (NASDAQ:MSFT)'s $69 billion takeover of gaming developer Activision Blizzard (NASDAQ:ATVI) as a questionable allocation of capital at a time when poor countries are struggling to restructure debts and fight COVID-19 and poverty.

Malpass said during a Peterson Institute for International Economics virtual event that more capital needed to flow into poor countries, but these flows have been disrupted by unusually easy monetary policies in developed countries.

He said he was struck by the scale of Microsoft's acquisition deal for "Call of Duty" maker Activision Blizzard. This dwarfed the $23.5 billion in cash contributions agreed in December by wealthier donor countries to the International Development Association, the World Bank's fund for the poorest countries -- about $8 billion annually over three years, he said.

"You have to wonder: 'Wait a minute, is this the best allocation of capital?'" Malpass said of the Microsoft deal. "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, he added.

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

His comments echoed a similar call last week for central banks to cut long term bond holdings to free up lending capital.

"That gets you into a situation where a huge amount of the capital is being allocated to already capital-intensive parts of the world -- the advanced economies -- building more and more on top of already heavily built infrastructure and real estate, for example," Malpass said.

Meanwhile, a return to more normal global investment returns is needed to bring more financing capacity to small businesses in the developing world," he said.

"In order to address the refugee flow, that malnutrition that's going on, and so on, there has to be more money and growth flowing into the developing countries," Malpass added.

World Bank chief takes swipe at Microsoft's $69 billion gaming deal as poor countries struggle
 

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Comments (8)
Ayumastura PinkLady
Ayumastura PinkLady Jan 20, 2022 2:30AM ET
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if u dont have enough cash, just buy more paper & printer. It's their money. They have their right to spend & expand. Your problem isn't their problem
Тони Chuk
Тони Chuk Jan 20, 2022 2:30AM ET
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the bigger gipsy hates when something happens with out him!
NK TT
NK TT Jan 20, 2022 1:44AM ET
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This guy must have lost his mind. Someone should inform thia guy that Microsoft is not a charitable organization, it's company obliged to make money to it's shareholders.
Sunil Sugnani
Sunil Sugnani Jan 20, 2022 1:28AM ET
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I have absolutely no idea what this guy is talking about? Microsoft is not a government organization
Sattar Langary
Sattar Langary Jan 19, 2022 10:10PM ET
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lol, Microsoft will make more money from this deal and will certainly help donate too.
John Lakran
John Lakran Jan 19, 2022 8:56PM ET
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Should change their names to World Leeches
Emilio Crescenzi
Emilio Crescenzi Jan 19, 2022 7:07PM ET
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I'm Argentinian,immigrate to Canada 20 years ago,I left the country because the corruption,dollars that they get dollars that the put in politician bankaccounts, is a waste of time and money,they are poor because the corruption,in develop countries people don't have idea of the level of corruption .
Chad PoorerThanYou
Chad PoorerThanYou Jan 19, 2022 7:07PM ET
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Corruption is good - it should be possible to buy people
Brian Lewis
Brian Lewis Jan 19, 2022 6:08PM ET
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I thought Microsoft was a business, not a non-profit organization.
Stephen Rickman
Crotty Jan 19, 2022 6:08PM ET
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Yeah I’m really confused by the WB’s neg comments on the MCSFT aquisition.
Ian Arnold
Ian Arnold Jan 19, 2022 6:05PM ET
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that is a good point.
 
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