Redacted: Acquisitions (Premium)

With Microsoft's blockbuster acquisition of Activision Blizzard still hanging in the balance, it's interesting to know that the software giant has had its eye on other video gaming industry giants. And that things might have gone quite differently for Xbox.

This post is the third in an open-ended series of articles plumbing the depths of the recent and unprecedented Xbox leak. I had hoped to wrap this up quickly, but the other incredible news from last week---including Panos Panay's departure from Microsoft and then Microsoft's AI special event---proved especially distracting. But let's get back on track with some insider information that reveals how the software giant's strategy to revive Xbox led to a series of key acquisitions as well as a few near misses.

As it turns out, Microsoft has a long history of video game studio acquisitions, dating back to the Bungie acquisition that brought the original Halo in-house for the original Xbox console launch in 2001. This was followed by Rare (Kameo, Perfect Dark Zero, Viva Piñata, others) in 2002 and then its shocking $2.5 billion purchases of Minecraft maker Mojang and the Gears of War franchise in 2014. But with Xbox losing three console generations in a row, the previous one badly, the software giant decided that the only way to beat Sony was to play the same game. And so it stepped up the studio acquisitions in a bid to create a massive catalog of Xbox exclusive and cross-platform content. The biggest so far is ZeniMax Media, which owned the Bethesda, id Software, Arkane, and other studios and set Microsoft back $7.5 billion in 2020.

Today, Microsoft owns 23 game studios and several core franchises, including Halo, Gears, Minecraft, Flight Simulator, Fallout, DOOM, Forza, The Elder Scrolls, and more. And should the Activision Blizzard acquisition go through---and it looks like it will now---it will add Call of Duty, Candy Crush, Diablo, Overwatch, World of Warcraft, Starcraft, Crash Bandicoot, and others to that list.

But things could have gone differently. In mid-to-late 2020, at the height of the COVID pandemic, the U.S. government was considered banning the popular TikTok video creator platform because of its ties to China, and Microsoft, inexplicably, tried to intervene by partially acquiring the service. And then by fully acquiring the service for $20 billion. Things got messy, Oracle got involved, and then the Chinese government stepped in, changing its export control rules to prevent either firm from taking full control of the company. And so Microsoft gave up on TikTok and Oracle partnered with the company on its U.S. operations. And in a post mortem, I analyzed its public statements about walking away for clues to why it would have even wanted TikTok in the first place. Obviously, I wrote, Microsoft could have benefitted from moving this popular service to Azure.

But Microsoft had other motives, as it turns out. According to internal documents that were part of the X...