What Companies Does Microsoft Own?

What Microsoft (MSFT 1.82%) owns could fill a football field and then some. With the possible of exception of Apple (AAPL -0.35%), no company has played more a bigger role in shaping the modern computing era from the early days of personal computer to the AI revolution than Microsoft.

The tech giant has made its mark in almost every major transition in information technology, parlaying its dominance in computer operating systems from the early days of DOS into a tech empire that includes its Office software suite and other widely used enterprise software programs, its cloud-computing juggernaut Azure, the Xbox video game system, devices like the Surface, and many other businesses that have come under its umbrella through acquisitions.

Microsoft has been enormously profitable throughout its history and has been one of the most valuable companies in the world for more than a generation. That's also made it a great buy-and-hold stock for investors. Its profits have enabled the company to make a wide range of acquisitions, expanding its business empire. Although not all of them have paid off, many have delivered solid returns for Microsoft and form the foundation of a company at the cutting edge of artificial intelligence today.

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What Companies Does Microsoft Own?

Over its history, Microsoft has made a number of blockbuster acquisitions to complement its core software and Windows operating system business and extend its reach into new businesses.

Unlike some of its peers, Microsoft is not easily defined since the company does many things, and not all of them are closely related. It has a diverse range of revenue streams, and its acquisition strategy has helped it expand into new businesses. Keep reading to learn more about companies that Microsoft owns and how those acquisitions played out.

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1. Activision Blizzard, 2023, $69 billion (100% ownership)

Microsoft's acquisition of Activision Blizzard, the video game publisher of well-known titles like Call of Duty, took almost two years to pass regulatory muster, but the deal finally closed in October of 2023.

It's too early to judge the success of the acquisition, but the deal is expected to beef up Microsoft's gaming operations by adding new titles to the Xbox, giving it a greater stake in mobile gaming and driving subscribers to its Xbox subscription program, Game Pass.

It's clear from Microsoft's second-quarter results that the Activision acquisition is having a significant impact. The Xbox business as revenue from Xbox jumped 61% in the quarter, with 55% of that growth coming from Activision, and Microsoft didn't even own it for a full quarter. The real test for the deal, however, will be how it supports Microsoft's gaming growth over the long term.

2. LinkedIn, 2016, $26.2 billion (100% ownership)

Satya Nadella has led Microsoft for roughly 10 years, and his acquisition of LinkedIn has unquestionably been one of his biggest moves.

It took Microsoft outside the cozy confines of enterprise software and into social media, an arena dominated by digital advertising titans Meta Platforms (META 0.43%) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). The purchase also was Microsoft's biggest acquisition at the time.

When the deal was announced, Nadella described the move as a way of uniting LinkedIn's professional network with Microsoft's professional cloud. Microsoft also saw value in LinkedIn's massive dataset on corporate America, especially its employment and recruitment patterns.

Since the acquisition, Microsoft has largely allowed LinkedIn to be independent, avoiding the integration challenges that can sink otherwise promising acquisitions. Jeff Weiner, who was CEO of LinkedIn at the time of the deal, remained in the leadership post through 2020, and LinkedIn has delivered steady growth for Microsoft over the years.

In the the second quarter of 2024, LinkedIn's revenue grew 9%, although Microsoft does not break out other metrics from the social network.

3. Skype, 2011, $8.5 billion (100% ownership)

Microsoft's 2011 acquisition of Skype was its largest such deal at the time and seemed emblematic of the Steve Ballmer era of missed opportunities, poor strategic decisions, and bad capital allocation.

At the time of the deal, there seemed to be some logic behind the move. Skype was the leader in internet video conferencing, with more than 100 million users per month, and videoconferencing was gaining adoption in the mobile era.

However, Microsoft never successfully integrated it with its larger suite of software products, the way it has today with, say, Teams, its competitor to Slack. Microsoft also struggled to adequately monetize Skype, which at the time of the deal was roughly breaking even.

Eventually, Microsoft lost the videoconferencing market to Zoom Video Communications (ZM 1.57%), which capitalized on the tech giant's missteps and solved problems that Skype never figured out.

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4. GitHub, 2018, $7.5 billion (100% ownership)

In addition to LinkedIn, acquiring GitHub has been one of the most transformative moves of Nadella's tenure. The purchase of the open-source code repository pivoted Microsoft to a more open platform.

Microsoft acquired GitHub in part as a way to increase its own developer pipeline and build more cloud software apps and tools. GitHub has also contributed to the rise of Azure, which has arguably been Microsoft's biggest success story under Nadella as Microsoft stock has been a big winner under his command.

Finally, GitHub has played a significant role in Microsoft's artificial intelligence strategy since it was one of the first businesses for which Microsoft introduced its AI-based Copilot, powered by OpenAI, which helps write and edit code on GitHub.

5. aQuantive, 2007, $6 billion (100% ownership)

aQuantive was arguably the worst acquisition in Microsoft's history. The deal for the online advertising business was Microsoft's largest acquisition at the time, and the company paid an 85% premium over aQuantive's stock price to buy it.

At the time, Microsoft presented the deal as a crucial component of its ad strategy, coming on the heels of Google's purchase of DoubleClick. However, Microsoft struggled to compete with Google in both search and web-based advertising on partner websites, and Google's search strength gave it a natural advantage.

Chasing after a competitor proved to be a mistake, and in 2012, Microsoft took a $6.2 billion writedown on aQuantive, essentially acknowledging that the business was worthless in Microsoft's hands. It was a huge strategic failure.

6. OpenAI, 2019-2023

Microsoft's relationship with OpenAI could be its most consequential, although it's also its most mysterious. The company has said that it's invested several billion dollars in the ChatGPT-maker, but it's unclear what it actually receives for its investment.

OpenAI also has an unusual corporate structure. The company was founded as a non-profit, but has created a capped-profit company within the larger non-profit entity.

Microsoft has said that the details of its agreement remain confidential, but it doesn't own any portion of OpenAI. It only has a claim to a share of profits.

However, the two companies have a close strategic partnership, and OpenAI's technology and Microsoft's own recognition of its potential is a major reason why Microsoft stock has soared recently and Microsoft is once again the world's most valuable company.

Expect the relationship to evolve further and for Microsoft to use OpenAI's generative AI technologies to advance its own businesses and strengthen its competitive advantage.

Potential acquisitions

What companies could Microsoft acquire in the future?

Considering Microsoft's exposure to a wide range of tech businesses, including operating systems, enterprise software, video games, advertising, social media, code development, computing hardware, cloud computing, and artificial intelligence, there are a number of future acquisitions that the company could make.

With a huge premium now being placed on AI chips like those made by Nvidia (NVDA 6.18%), it would make sense for Microsoft to buy a company that would help it develop its own chips since Nvidia's graphic processing units (GPUs) have proven to be a bottleneck in AI development.

In January 2023, Microsoft acquired Fungible, a chip-design startup, for an estimated $190 million. We could see other such deals from Microsoft as it attempts to build out its own proprietary chips.

An enterprise software acquisition wouldn't be surprising, nor would a purchase in an area that complements its business. Nadella has shown he's not afraid to spend big when the opportunity is right. A target like LinkedIn or GitHub that would help consolidate Microsoft's leadership with its enterprise customers would also be enticing for the company.

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The bottom line on companies that Microsoft owns

Microsoft subsidiaries complement its sprawling tech empire well, and the acquisitions it's made under Nadella have paid off, although it will take time to render a verdict on the Activision Blizzard deal. And although it's not technically an acquisition, its strategic partnership and investment in OpenAI may have been its smartest move yet.

With Microsoft's market capitalization now around $3 trillion and annual profits around $100 billion, it shouldn't be surprising to see it make more acquisitions down the road, especially given its history of spending to buy companies.

With its sights set on artificial intelligence, cloud computing, enterprise software, and other evolving technologies, Microsoft looks like a good bet to lead the tech industry for another generation. To remain in the lead, it's likely to expand its empire through acquisitions.

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