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A weekly look at a story that is defining the news.

Several reports that circulated this week claimed that Microsoft (NSDQ: MSFT) had made…

Microsoft
photo: Corbis

A weekly look at a story that is defining the news.

Several reports that circulated this week claimed that Microsoft (NSDQ: MSFT) had made zero acquisitions in 2010, a stark contrast to Google’s 25. And, while it’s true that Microsoft hasn’t announced any deals, by the company’s own admission, it has actually purchased about 15 companies over the last year. The names of most of them haven’t been disclosed, but we can confirm that Microsoft did purchase the virtual world Vivaty this summer.

Vivaty, a 3D virtual world that had raised more than $9.4 million in backing from investors including Kleiner Perkins, shut down in April, saying it was out of money. At the time, Founder Keith McCurdy, a former VP at Electronic Arts (NSDQ: ERTS), told told VentureBeat that the company was in the final stages of being sold and that its IP would be used “as the foundation for something else.” The buyer was Microsoft, McCurdy tells us in an e-mail.

It’s not clear why Microsoft bought Vivaty and McCurdy wouldn’t say. But Microsoft seems to have a specific interest in gaming companies. ZDNet’s Mary Jo Foley reported this week that Microsoft was making “overtures” to various social gaming companies, including possibly Second Life parent Linden Lab. (A commenter on her post mentioned that Microsoft had quietly purchased Vivaty, prompting me to check.)

Virtual worlds are an odd category for Microsoft to be interested in, considering that the business seems to be falling out of favor with both investors and users, and several, including Metaplace, Vivaty and There.com, have shut down in recent months. Even Linden Lab is said to be struggling. CEO Mark Kingdon resigned in June, a few weeks after the company cut 30 percent of its staff.

By contrast, social games are taking off and, indeed, Microsoft was in talks to buy Happy Aquarium developer CrowdStar earlier this year. Those talks fell apart in late March.

It’s possible that a virtual world of some sort could be folded into Microsoft’s popular Xbox Live service a la PlayStation Home. Or, possibly, it could bulk up Microsoft’s MSN Games portal, which has slipped in popularity over the last year.

So why didn’t Microsoft just announce the Vivaty deal? We’re still awaiting a response from the company. But it seems as though Microsoft has made a strategic decision to keep many of its recent purchases hush-hush. That’s a contrast to Google (NSDQ: GOOG), which seems to announce all of its acquisitions no matter how small and has gained the reputation for being extremely loose with its checkbook. Maybe Microsoft wants to present itself as being more careful with investors’ money, a desire which is apparent in some of the company’s other recent moves as well.

Microsoft Managing Director of corporate development Marc Brown said at a conference this week that his company had made about 15 acquisitions over the last 12 months, all for under $75 million, according to a report in TechFlash. Microsoft announced five purchases between September and December of last year and including Vivaty makes six. But none of the other names have leaked. Feel free to share those names with us if you know.

By Joseph Tartakoff

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  1. wouldn’t they be required to disclose to shareholders?

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  2. Joseph Tartakoff Saturday, October 2, 2010

    In their 10-K (dated July) they say they made five acquisitions in fiscal year 2010, which ended at the end of June. Could be that some of the other 10 have happened since then or that they were done in fiscal year 2010 but hadn’t closed by the time of the filing.

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  3. OH wow, thats pretty fascinating indeed.

    http://www.complete-privacy.es.tc

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  4. woot!

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  5. All I can tell you is that most Microsoft acquisition are under 10 mil and are usually not made public. They do around 10-20 of them every year with a good amount of budget kept it.

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  6. Microsoft aquired TrueSpace by Calagari

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  7. All I can tell you is that most Microsoft acquisition are under 10 mil and are usually not made public. They do around 10-20 of them every year with a good amount of budget kept it

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