Why Microsoft Is Not Buying Valve…Especially Right Now

 

Why Microsoft Is Not Buying Valve…Especially Right Now

Last week, the rumor mill began circulating the idea that Microsoft could make a bid to acquire Valve Software, the owner of the monolithic PC gaming platform, Steam, as well as the developer of popular titles such as Portal, Team Fortress, and Counter-strike.

Could this acquisition actually happen? The short answer is “almost certainly not” but the history of how this rumor gained initial traction begins in a leaked 2020 email from Microsoft Gaming’s CEO, Phil Spencer. During the embattled acquisition of Activision Blizzard by Microsoft in 2023, the FTC sought to block the move.

While the parties were entangled in legal proceedings, numerous documents were disclosed, and then leaked to the public. These leaks included an email from Phil Spencer stating that their “BoD [Board of Directors] has seen the full writeup on Nintendo (and Valve) and they are fully supportive on either if opportunity arises as am I.” When this email first made the rounds on social media, there seemed to be many people reading this email as an official memorandum that Microsoft Gaming was actively pursuing the acquisition of Valve, but really all the email said was that if the opportunity arose, they would take it. This is a far cry from making any bids on the corporation, especially where the company is privately owned, which limits Microsoft Gaming’s ability to even acquire it, except in the case of an IPO (an Initial Public Offering). 

This is not a new rumor. This type of speculation has been circulating in the background for months, so why is this rumor now being written about by nearly every major gaming publication? The answer is a May 22 post on “X” from a user named “Dior”, who joined just before the prior leaks in 2023 and then deleted all of their posts from that year. Dior’s new post has been flagged with added context, and Tech Times, among other publications, stated that there has been “no official confirmation” of any of the alleged information.  

The post, however, has already made the rounds with nearly every major gaming content site. Its matter-of-fact, news-like announcement lured millions of users in with a picture of a lounging Gabe Newell (known by some in the gaming world as Gaben) the President of Valve. The picture gives the impression that Gaben is ready to retire and has better things to do than run one of the most successful companies in the gaming world, and let’s be honest, it makes sense for Valve to be on anyone’s radar who has the capital to do anything about it when the opportunity arises. Even well-established investing companies have weighed in on the value that Valve could produce if there were ways to slice off a piece of the pie. In April of 2024, the Motley Fool veritably sang the company’s praises as a “gaming titan” that has “become to gamers what the Apple Store is to TV, movie, and music fans.” Say what you will about Phil Spencer and how he has run Microsoft and Xbox, but this would be a monster move if it happened. However, none of what Dior says is supported by any facts, as valuable as a move such as this might be for Microsoft.

The obvious first reason this is likely not happening is that this information has not been corroborated by anyone, and seems to be a means to capitalize on rumors of Microsoft’s general interest in acquiring Valve dating back to 2020. In a world where engagement is currency, rumors tend to cycle back around even if they have already been debunked once.

Secondly, while the means and the motive are there for Microsoft, Valve is privately owned with no IPO currently announced, so the opportunity is lacking and is completely within Valve’s control.

Lastly, and perhaps most importantly, Microsoft needs to be especially careful with its acquisitions at least for now. After the Activision deal closed in October of 2023, the FTC appealed just a few months after the deal closed. Why appeal after a deal closes? Because after the acquisition, the FTC alleges that Microsoft promptly went back on many representations it had made in court, some of which the court relied on in approving the acquisition, including promises to keep the companies independent and maintain the status quo, especially where staffing is concerned. Microsoft, of course, denies these allegations, but the facts are hard to ignore. The deal was supposed to be a vertical merger, where the companies operated relatively independently and synergized with each other, as opposed to consolidating or eliminating redundancies–firing people–as one often would in a horizontal merger. If Microsoft were to try to acquire another gaming giant right after slipping past the FTC with promises that it broke immediately thereafter by laying off almost 2,000 employees, it would potentially be a legal nightmare for them. Would the legal costs outweigh the potential outcome? With Valve on their books, probably, but I doubt it would be as easy as acquiring Activision Blizzard (which was not easy at all).

After seeing what happened when Activision Blizzard was acquired, Valve will likely think twice about letting themselves be bought out, and since it is privately owned, they have all the time in the world to stay that way and no panel of investment-driven shareholders to force them to take the easy money. 

I’ll admit I’m not Snopes, I’m just a PC gaming nerd, but this rumor, much like Microsoft’s promises to the FTC, feels pretty fake.