Don’t be fooled by randomness

The method in Microsoft’s merger madness

Making sense of the software giant’s acquisitive streak

TAKE OUR cash, or at least our shares. That appears to be Microsoft’s mantra these days. After failing to acquire the American operations of TikTok, a short-video app, last year, the software giant was recently rumoured to be in takeover talks with Pinterest, a virtual pin-board, and Discord, an online-chat service. And on April 12th the firm announced that it would acquire Nuance, a speech-recognition specialist, for nearly $20bn in cash—its second-biggest acquisition ever.

Even before this latest flurry Microsoft had acquired a reputation for coveting tech firms that looked as alien to its core business of selling office software as TikTok’s dance videos are to Word and Excel. Five years ago, in its biggest purchase, it paid $26bn for LinkedIn, a business-oriented social network. In 2018 it picked up GitHub, a development platform for open-source programs, for $7.5bn.“Is Satya Nadella getting bored?” wondered the Information, a website covering the tech industry. Having successfully turned Microsoft around, observers murmured, its boss might be in the grip of merger madness. In fact, there might be a method to it.

For starters, Microsoft’s merger activities are unexceptional by big-tech standards, says Mark Moerdler of Bernstein, a broker. The industry is rife with takeover rumours; most…