FTC starts turning the screw on Big Tech

The Federal Trade Commission (FTC) has issued Special Orders to five of the technology industry’s biggest hitters as it takes a more forensic look at acquisition regulation.

Under the Hart-Scott-Rodino Act, certain acquisitions or mergers are required to be greenlit by the regulatory authorities in the US before completion. This is supposed to be a measure to ensure an appropriate marketplace is maintained, though there are certain exceptions to the rule. It appears the FTC is making moves to combat the free-wheeling acquisition activities of Big Tech.

Under the Special Orders, Google, Amazon, Apple, Facebook and Microsoft now have to disclose all acquisitions which took place over the last decade. It appears the FTC believes the current rules on acquisition need to be reconsidered.

“Digital technology companies are a big part of the economy and our daily lives,” said FTC Chairman Joe Simons. “This initiative will enable the Commission to take a closer look at acquisitions in this important sector, and also to evaluate whether the federal agencies are getting adequate notice of transactions that might harm competition. This will help us continue to keep tech markets open and competitive, for the benefit of consumers.”

While authorities have already questioned whether some acquisitions are in the best interest of a sustainable industry, in fairness, Big Tech has done nothing wrong. Where relevant, the authorities have been notified regarding acquisitions, and they have generally been approved. If the FTC and its cousins in other regulatory authorities believe the current status quo is unappealing, they only have themselves to blame.

In general, an acquisition will always have to be reported if the following three criteria are met:

  1. The transaction would have an impact on US commerce
  2. One of the parties has annual sales or total assets of $151.7 million, and the other party has sales or assets of $15.2 million or more
  3. The value of the securities or assets of the other party held by the acquirer after the transaction is $68.2 million or more

All three of these criteria have to be met before the potential acquisition has to be approved by the regulators.

Interestingly enough, the Android acquisition by Google is rumoured to be for roughly $50 million, therefore the third criteria was not met, and the team did not need to gain regulatory approval for the deal. This is perhaps what the FTC is attempting to avoid in the future, as while we suspect there was no-one in the office at the time with enough foresight to understand the implications, the regulator might suggest it would not have approved the deal in hindsight.

One of the issues being faced currently, and this is true around the world not just in the US, is that authorities feel they have lost control of the technology industry. Companies like Google and Facebook arguably wield more influence than politicians and regulatory authorities, a position few will be comfortable with outside of Silicon Valley.

Aside from this investigation, the FTC is also exploring Amazon in an antitrust probe, while Google and Facebook are facing their own scrutiny on the grounds of competition. There have also been calls to break-up the power of the technology companies, while European nations are looking into ways to force these companies to pay fair and reasonable tax. Across the world, authorities are looking for ways to hold Big Tech more accountable and to dilute influence.

Interestingly enough, we don’t actually know what the outcome of the latest FTC foray will be. It will of course have one eye on updating acquisition rules, though as Section 6(b) of the FTC Act allows the regulator to conduct investigations that do not have a specific law enforcement purpose; it’s a blank cheque and the potential outcome could head down numerous routes.

Cellnex finds another €800m to expand tower empire into Portugal

Cellnex has expanded its European footprint once again through the acquisition of Omtel, taking the infrastructure giants into the Portuguese market.

It is perhaps becoming difficult to fully convey the aggressive nature of Cellnex’s expansion over the last 12-18 months. This €800 million transaction is another to add to the increasing list of moves made by the firm to quickly expand the geographical relevance of the business. Altice Portugal and Belmont Infra Holding are the beneficiaries this time.

“With Omtel, we are not only integrating one of the leading independent telecommunications infrastructure operators in Portugal,” said Cellnex CEO Tobias Martínez.

“We are also committing to consistent growth in Europe, incorporating an eighth market – which naturally extends the current geographical coverage of the seven countries in which we already operate, and in this case especially due to the proximity and operational synergies that may arise with the Group in Spain.

“We are also incorporating a new client, Meo, which is the market leader and joins a rich and diversified mix of clients in Europe, covering the leading operators in the markets in which we operate.”

As part of the deal, Cellnex will acquire 3,000 mobile cell sites, roughly 25% of the total across Portugal, while there are plans through the build-to-suit (BTS) programme to deploy additional 350 by 2027. The current expansion plans have been tabled at a cost of €140 million.

While Cellnex is proving to be a very ambitious firm right now, this might be down to opportunism more than anything else. European telcos do not have the same scale as those in North America or Asia and have been financially strained over the course of the last decade. Most are now searching for funds to fuel 5G and fibre deployment plans, and divestment in passive infrastructure is proving to be a popular strategy.

The telcos financial situation has been well-publicised and Cellnex is one of a few different players seemingly hunting bargain deals for infrastructure assets across the continent.

Aside from the Omtel investment, Cellnex has also bought 1,500 sites from Orange Spain, Arqiva’s Telecoms division for £2 billion, Irish tower company Cignal, 70% of the operating company which manages Iliad’s 7,900 sites and 2,800 sites from Swiss telco Salt. Alongside this spree of acquisitions, Cellnex also obtained marketing and operating rights for 220 BT high towers distributed throughout the UK for 20 years and has signed numerous co-operation deals across the continent.

All of these deals were announced post-May 2019. It has been a very busy six months.

Cellnex has certainly noted telcos are in a precarious position and is throwing some serious cash to obtain assets. It might be expensive in the short-term, but it has guaranteed customers for as long as anyone can stare into the future; Cellnex and its 60,000 sites is a heavy-weight, profit making machine.

Brookfield finds more cash for $2.6bn Cincinnati Bell purchase

Brookfield Infrastructure has continued its Christmas spending spree with the acquisition of Cincinnati Bell for $2.6 Billion.

Shareholders will welcome a 36% premium on share price, with Brookfield Infrastructure paying $10.50 in cash at closing of the transaction. The proposal has already been unanimously approved by Cincinnati Bell’s Board of Directors and now moves through to the regulatory approval process.

“The transaction strengthens our financial position, enabling accelerated investment in our strategic products that is not presently available to Cincinnati Bell as a standalone company,” said Leigh Fox, CEO of Cincinnati Bell. “This will allow us to drive growth and maximize value over the long term to the benefit of all our stakeholders.”

“This investment represents an opportunity for Brookfield Infrastructure to acquire a great franchise and leading fiber network operator in North America,” said Sam Pollock, CEO of Brookfield Infrastructure. “We are excited to leverage our operating expertise to work with the company’s management team as it completes its industry-leading fiber optic rollout plan. Cincinnati Bell is a great addition to our data infrastructure portfolio, and we expect it will contribute strong utility-like cash flows with predictable growth.”

For Brookfield Infrastructure, this closes a very busy end to 2019, with the team investing considerable funds in the telecom infrastructure business. Aside from this transaction, the team has confirmed the acquisition of Reliance Industries’ mobile infrastructure business unit in India and also a 93% stake in Wireless Infrastructure Group (WIG), an operator-neutral infrastructure provider in the UK.

Looking at Cincinnati Bell, the attractive fibre assets in Hawaii, Ohio, Kentucky, and Indiana will now be offered a super-charge with additional investments from the seemingly cash-rich Canadians. The telco currently has a footprint of over 1.3 million homes, delivering broadband, video and voice services to consumer and enterprise customers. 17,000 miles of dense metro and last-mile cables have been ‘future-proofed’, and with the customer appetite for fibre and 5G backhaul getting more evident, it makes sense the money-men are starting to get more interested in communications infrastructure.

The industry does seem to be demonstrating a useful convergence trend in recent months. Investment funds are becoming more interested in infrastructure investments, while the telcos are getting more desperate for additional funds to fuel deployment strategies. It might not be a surprise to see more of these deals over the early months of 2020.

EFF rouses rabble over .ORG sale

The Electronic Frontier Foundation (EFF) has officially made its stance over the sale of the valuable .ORG domain registry to private equity firm Ethos Capital.

The deal between the Internet Society and Ethos Capital was initially announced last month, though the completion of the $1.135 billion transaction has been delayed, partly thanks to the vocal opposition from the likes of the EFF.

“Non-governmental organizations all over the world rely on the .ORG top-level domain,” EFF states in a letter to Internet Society CEO Andrew Sullivan.

“Decisions affecting .ORG must be made with the consultation of the NGO community, overseen by a trusted community leader. If the Internet Society (ISOC) can no longer be that leader, it should work with the NGO community and the Internet Corporation for Assigned Names and Numbers (ICANN) to find an appropriate replacement.”

The concern from the EFF is financially driven. Should Ethos Capital be permitted to acquire the Public Interest Registry (PIR), the EFF believes the influence it wields may well threaten the concept of free speech.

The sale to Ethos Capital follows ICANN’s decision to remove price caps on registration fees for .ORG names. Ethos Capital now has the freedom to effectively charge whatever it pleases, as well as the ability to creates features which include ‘protections for the rights of third parties’. EFF argues these protections are often used as a justification and legal cover for censorship.

Aside from the EFF objections, the Packet Clearing House (PCH) recently suggested a sale to a private company would have a “disastrous effect on stability”, as less money would be spent on operational demands. Few will be concerned that The Girl Scouts of North America’s website is a bit twitchy, but .ORG is also used for air traffic control, containment of communicable disease, and verification of non-proliferation of weapons of mass destruction.

The sale itself has proven to be very controversial in the internet community, though calls to ICANN to block the transaction may well fall on deaf ears. The organisation has already said it cannot do anything to deter the deal unless it impacts security or the stability of the internet.

On the other side of the coin, this could prove to be a very good bit of business for Ethos Capital. According to PCH, operational costs for the .ORG domain is roughly $30 million a year and it brings in revenues of $100 million. Prices vary, though if Ethos Capital was to double the cost of the .ORG domain, it would certainly still be tolerable. Purchasing .ORG for as little as $1.135 billion might prove to be a very clever bit of business.

Google pushes further into hardware world with Fitbit purchase

Google has announced it has entered into a definitive agreement to acquire wearables brand Fitbit as it further explores its options in the hardware segments.

While wearable fitness devices are certainly a long-slog away from Google’s core competencies, it has already shown it is able to gain traction in the hardware segments with the success of its smart speaker. With the Pixel smartphones, smart speakers, Chromebook, the Nest Thermostats and now Fitbit, Google is certainly spreading its wings.

“Three and a half years ago, I joined Google to create compelling consumer devices and services for people around the world,” said Rick Osterloh, SVP of Devices & Services.

“Our hardware business is still relatively young, but we’ve built a strong foundation of capabilities and products, including Pixel smartphones and Pixelbooks, Nest family of devices for the home, and more.

“Google also remains committed to Wear OS and our ecosystem partners, and we plan to work closely with Fitbit to combine the best of our respective smartwatch and fitness tracker platforms. Looking ahead, we’re inspired by the opportunity to team with Fitbit to help more people with wearables.”

Although this has been a rumour which has been circulating for a while, it certainly looks like a sensible move for the internet giant. This is another example of Google doing what Google does; throws money at an idea which it likes.

The core Google business model is a relatively simple one. Its services are some of the best available, however to continue growth it needs to ensure these services are being pushed into new ecosystems. For example, it started as a desktop application, before buying Android and dominating the mobile space, then when the voice user interface started to gather steam, it brought out a range of smart speakers. Each of these moves takes the core Google services into a new domain, and Fitbit is no different.

The wearables segment has constantly promised the world but delivered only a fraction, though there does seem to be gathering momentum. Smart watches and other wearable devices are becoming more popular, and it does offer Google another opportunity to interact with the consumer in a different environment.

Google currently has a voice assistant which allows for the voice user interface, Fitbit devices will soon enough be powered by Google’s Wear OS, while it has been doing some promising work in gesture control also. These elements would all link back to Google’s other services, such as the Mapping product or search engine. Fitbit looks like an attractive investment because it offers Google another opportunity to make money in another domain.

Despite being an incredibly sound brand, Fitbit has been suffering in recent years. It found fame and success in delivering a niche wearable device for fitness enthusiasts, though as the wearables segment slowly evolved, it did not. Other more complex devices evolved to offer fitness elements, stealing some of the shine from the Fitbit. Its own attempts to create smart watches have been hit and miss.

Fitbit does need to evolve its product beyond the niche fitness devices which it produces today, but to develop something which is competitive in a market with the likes of Apple, it will take cash. Fortunately, this is something Google can contribute with abundance. However, Google will have to make sure it lets Fitbit be Fitbit.

Google will have to make sure it leaves the Fitbit team on its own to hire the right people and design the right products. Google’s heritage is in software after all and wearables need to marry substance and style. We suspect a horde of software engineers might not be the best suited to get too involved.

Should Google leave the Fitbit team to create an excellent product, just like it left Nest on its own, and marry the devices to its wider service ecosystem, this could be a very crafty acquisition.

Investors scupper Sunrise expansion plans

Sunrise has cancelled an Extraordinary General Meeting (EGM) to secure acquisition funds to acquire UPC Switzerland after investors rejected the move.

Announced back in February, Liberty Global proudly proclaimed it had offloaded its Swiss business unit, UPC Switzerland, for $6.3 billion. At the time, the acquisition looked expensive, and it now appears the investors aren’t prepared to foot the bill.

“We regret cancelling the EGM,” said Peter Kurer, Chairman of the Board of Directors of Sunrise.

“We have spent a significant amount of time engaging with our shareholders and continue to believe in the compelling strategic and financial rationale of the acquisition.”

To fund the acquisition, Sunrise was attempting to force through a 2.8 billion franc rights issue, though this was opposed by Freenet, Sunrise’s biggest shareholder, as well as several other investors. With the opposition from such weighty investors, the writing was clearly on the wall for the Sunrise management team.

While the deal had already received regulatory approval, the usual stumbling block for consolidation in smaller markets, all the opposition arguments come back to the price of the acquisition.

For Sunrise, this was supposed to be a deal which would allow it to compete on a more level footing with market leader Swisscom. With UPC Switzerland introduced to the mix, Sunrise would have inherited mobile subscribers to boost market share, but also a fixed business unit which passes more than 50% of homes across Switzerland.

Theoretically, the inclusion of such assets would have enabled the business to create an attractive convergence model to challenge the leadership position of Swisscom, but it was too expensive.

Just to put things into perspective, the current market capitalisation of Sunrise is roughly $3.57 billion, less than half of the value of the acquisition. This is not necessarily unusual, though when you look at what is being acquired the numbers start to look a bit suspect.

UPC Switzerland has passed just over 2.35 million homes with its fixed network, roughly 50% of the country’s total households. It has 1.07 million broadband subscribers, and 1.04 million video customers, 599,400 of which are premium. The mobile business currently has 173,400 subscribers.

In the three-months ending June 30, revenues at UPC Switzerland stood at $315 million, a year-on-year decrease of 5.2%. The revenue dip was attributed to poor performance in the fixed business unit, though this might be down to decreased marketing activity as management team cast its eye towards the Sunrise transaction; it isn’t necessarily a dip to read into too much.

Investors clearly do not believe these numbers justify a cheque worth $6.3 billion. Just to put it into context, BT acquired EE for £12.5 billion in 2016 and inherited 30 million mobile subscribers at a very similar ARPU.

For Liberty Global, this would seem to be back to the drawing board. The team is attempting to reduce exposure in Europe, refocusing attention on South America, and this will be a disappointing outcome.

T-Mobile and Sprint convince Colorado to cross the picket line

The coalition of lawyers fighting against the $26 billion T-Mobile US and Sprint merger has gotten a little bit weaker with Colorado dropping out of the resistance movement.

After the Attorney General for Mississippi secured concessions from the duo, the same has been achieved by Phil Weiser, the Colorado Attorney General. It might be the long-way around, but it does appear T-Mobile US and Sprint are turning some heads with individual, state-level deals.

“The State of Colorado joined a multistate lawsuit to block the T-Mobile-Sprint merger because of concerns about how the merger would affect Coloradans,” said Chief Deputy Attorney General Natalie Hanlon Leh.

“The agreements we are announcing today address those concerns by guaranteeing jobs in Colorado, a state-wide buildout of a fast 5G network that will especially benefit rural communities, and low-cost mobile plans.”

The guarantees are somewhat ambitious. New T-Mobile, how the merged entity is currently being referred to, has promised to deliver 5G with minimum download speeds of 100 Mbps to 68% of the state’s population within three years, and within six years, this coverage will have to increase to 92% of the population.

On the rural side, 60% of Colorado’s rural population will have to have access to 5G download speeds of 100 Mbps within three years of the completion of the transaction, increasing to 74% within six years.

New T-Mobile will also offer new tariffs at lower prices. Should the company fail to meet these commitments it will face $80 million in penalties.

In meeting these concessions, New T-Mobile might face some challenges. Colorado is the eighth largest state in the US at 269,837 km² (the UK is 242,495 km²), with some pretty mountainous landscapes. That said, the population does seem to help these coverage commitments.

Colorado has a population of roughly 5.6 million people, of which 4.89 million live in urban locations. The state has 196 towns and 73 cities, with the five biggest accounting for roughly 1.6 million people (23% of total). Should New T-Mobile cover the ten largest cities with 5G within three years, it would have achieved roughly 38% population coverage, more than half of the commitment made to the State.

With Colorado being a highly urbanised population, only 13% are described as living in rural environment according to Rural Health Info, the equation does not look quite as daunting. Another element to consider is the spectrum assets which will be owned by New T-Mobile.

Although it has been toying with the high-speed mmWave spectrum bands, New T-Mobile will have the benefits of the 600 MHz spectrum offering greater range for meeting the concessions. This will not deliver the eye watering speed which has been promised in perfect scenarios for 5G, though it will aid the demands of network densification. During a trial in January, T-Mobile US claimed a 5G call over 600 MHz could reach 1000 square miles from a single cell site.

Interestingly enough, the merger will also offer access to valuable mid-band spectrum which Sprint has been boasting about for years. Sprint is currently hording licences for the valuable 2.5 GHz band, very similar to the mid-band spectrum airwaves which are being championed in Europe because of the more palatable compromise between speed and coverage. Combining these assets with the mmWave trials puts New T-Mobile in a pretty attractive position.

Alongside the conditions placed on New T-Mobile, Dish will also face its own demands following the completion of the $5 billion acquisition of Sprint’s prepaid brand to maintain competition levels across the country. Dish will have to maintain the HQ in Colorado for at least seven years, hire an additional 2,000 people to work on the wireless business and Colorado will have to be one of the first 10 states Dish launches 5G in. Failure to meet these conditions will result in $20 million in fines.

The win in Colorado is a significant one for New T-Mobile and adds to the momentum gained in Mississippi. In this southern state, New T-Mobile will have to deploy a 5G networ with at least 62% of the population experiencing download speeds of at least 100 Mbps. These numbers increase to 88% within six years of the completion of the merger, though 88% of the rural population will also have to be upgraded to 5G by this time also.

Although this is not the end of the lawsuit led by the New York Attorney General, Letitia James to block the merger on competition grounds, it adds a dent to momentum.

The prospect of tackling James and a herd of 16 Attorney Generals might have seemed like a daunting one, but the divide and conquer strategy seems to be working well here. If the T-Mobile US and Sprint lawyers can convince a few more into ditching the lawsuit, the threat looks significantly lessened.

While there are some states where applying the same conditions as have been negotiated in Colorado and Mississippi would be incredibly difficult, the lawyers don’t have to worry about them. Chipping away at the states where 5G deployment might be a simpler task would certainly lessen the threat being posed by the coalition. There only needs to be another three or four convinced to cross the picket-line and the support for the merger starts to look much more substantial.

AT&T offloads Puerto Rico and the US Virgin Islands units to Liberty LATAM

Some might suggest this is a knee-jerk reaction to the intentions of an activist investor, though the vulture fund should not be able to claim credit for this one.

AT&T has announced it will sell its wireless and wireline operations in Puerto Rico and the US Virgin Islands to Liberty LATAM for $1.95 billion. The transaction is expected to close in six to nine months, depending on approvals from the FCC and the Department of Justice.

“I’m especially proud of our network and the recent network enhancements that have helped AT&T rank as the fastest network in Puerto Rico,” said Jose J. Davila, AT&T’s GM for the region. “AT&T also has the most coverage on the island, according to Mosaik.

“Our experienced and committed team members will continue to support these operations as we join Liberty Latin America. Liberty Latin America has expressed its commitment to provide high-quality communications services to the people of Puerto Rico and the U.S. Virgin Islands. And we’re confident that it is equally committed to supporting these communities.”

Although pressure is being applied to the AT&T management team by activist investor Elliott Management, this perhaps not a move which would have been seen as attractive. The vulture fund does often approve of asset divestment in the pursuit of increased dividends and a higher share price, but the intricacies of this deal does not add up.

In an open letter to AT&T investors, Elliott Management did call for divestment but only in pursuit of refocusing the business on core activities. In other words, Elliott Management wants AT&T to focus more acutely on connectivity products and services.

Looking at this deal with Liberty LATAM, AT&T is proposing the sale of core connectivity assets but retaining the service and responsibility of FirstNet and DirecTV assets in the region. What is being released and what is being retained does not make sense if this is the influence of Elliott Management. What is more likely is this transaction would have gone ahead irrelevant of outside influences.

“This transaction is a result of our ongoing strategic review of our balance sheet and assets to identify opportunities for monetization,” said AT&T CFO John Stevens.

“But doing so only made sense if we received a fair value from a buyer that is committed to taking this well-run business, with its skilled employees and loyal customer base, and help it thrive. Liberty Latin America has a strong reputation for quality of service, and we believe they have the experience to build on the success of these operations.”

As of June 2019, AT&T’s debt stood at $158 billion, largely thanks to expensive acquisitions in the pursuit of diversification. The team has said it plans to lower its debt by $20 billion over the course of the year. The team now claims to have completed or announced monetization efforts totalling more than $11 billion.

On the other side of the transaction, Liberty LATAM is continuing its quest to reprioritise the business. Following a number of divestments in the European region, the telco has been attempting to gather momentum in the LATAM markets. This is another deal which will improve the position of the firm.

“The combination of AT&T’s leading mobile and wired businesses with Liberty Puerto Rico’s leading high-speed broadband and TV business will create a strong and competitive integrated communications player,” said Balan Nair, CEO of Liberty Latin America.

“At Liberty Latin America, we are focused on investing in digital infrastructure, innovation and 5G networks and on delivering a friendly customer service experience. This transaction is evidence of that, and we are confident that this new combination will be good for our customers and our employees, including those joining us from AT&T.”

Looking at the Liberty LATAM business, the team is certainly not shying away from investments. Aside from this deal, the team also completed the acquisition of the remaining 12.5% of United Telecommunication Services, increasing the presence across several Caribbean islands. In August, the telco also announced aggressive expansion plans for broadband in Chile and was in discussion to acquire Millicom International earlier this year.

Verizon buys into alternative realities

Verizon has announced the acquisition of Jaunt XR, adding augmented and virtual reality smarts to its media division.

While few details about the deal have been unveiled, the deal will add an extra element to a division which has been under considerable pressure in recent months. The Verizon diversification efforts have proven to be less than fruitful to date, though this appears to be another example of throwing money at a disastrous situation.

“We are thrilled with Verizon’s acquisition of Jaunt’s technology,” said Mitzi Reaugh, CEO of Jaunt XR. “The Jaunt team has built leading-edge software and we are excited for its next chapter with Verizon.”

Jaunt XR will join the troubled media division of Verizon which has been under strain in recent months. The ambition was to create a competitor to Google and Facebook to secure a slice of the billions of dollars spent on digital advertising. On the surface it is a reasonable strategy, but like so many good ideas, the execution was somewhat wanting.

Since the acquisition of Yahoo, Verizon has had to deal with the after-effects of a monumental data breach, write off $4.6 billion of the money it spent on the transaction, spend big to secure a distribution deal with the NFL and cut 7% of its staff. The first few years of living the digital advertising dream has been nothing short of a nightmare.

Looking at the financials, during the last quarter the media division reported $1.8 billion in revenues. This was down 2.9% from the previous year and accounted for only 2% of the total revenues brought in across the group.

With Jaunt XR brought into the media family, new elements could be introduced to the portfolio. Details have not been offered just yet, though with VR, and more recently, AR expertise, there is an opportunity to create immersive, engaging content for the mobile-orientated aspects of the business.

This transaction will certainly add variety and depth to the services and products in the media portfolio, but soon enough you have to question whether Verizon is throwing good money after bad. This has not been a fruitful venture for the team thus far.

Azure is on a spending spree

Cloud has led the Microsoft recovery in recent years, and the Azure team is doubling down on that momentum with a third acquisition in as many months.

The financial details of the deal have not been revealed, though Movere will join the Microsoft Azure family, adding migration smarts to an already comprehensive armoury.

“As cloud growth continues to unlock opportunities for our customers, cloud migration is increasingly important for business’s digital strategy,” said Jeremy Winter Partner Director for Microsoft Azure. “Today, I am pleased to announce that Microsoft has acquired Movere, an innovative technology provider in the cloud migration space.”

Founded in 2008 as Unified Logic, the focus of the business was altered in 2014 after the management team experienced difficulties in migrating their business onto the Azure platform. The start-up has been a partner of Microsoft for more than a decade, though in the last five years, it has been more acutely focusing on migration challenges for customers.

For Microsoft, this is just another tool it can talk to potential customers about, adding to two acquisitions over the last couple of weeks.

In July, the Azure team announced the acquisition of BlueTalon, a firm which aims to simplify data privacy and governance across modern data estates. Just after in August, jClarity was added to the mix. jClarity, a leading contributor to the AdoptOpenJDK project, will help teams at Microsoft to leverage advancements in the Java platform.

Alongside Amazon AWS, Microsoft Azure is leading the pack in the cloud world and it does not want to give any opportunity for the ‘also rans’ to close the gap. These acquisitions are simply increasing the breadth, depth and variety of the Azure proposition.

And the importance of the cloud to Microsoft should never be under-estimated.

After joining the Microsoft in 2014, CEO Satya Nadella shifted the focus of the business towards the cloud. Azure was the new poster boy of the firm, which was looking like a shadow of the dominant player which dominated the 90s and 00s.

Since that point, total revenues have grown to $110.36 billion in 2018, from $86.833 billion in 2014. Operating income increased to $35.058 billion in 2018, up from $27.759 billion in 2018. And looking at market capitalisation, Microsoft is now valued at $1.05 trillion, the largest in the technology world.

The cloud is driving Microsoft forward, and it is not afraid to spend some cash to capitalise on the momentum.