The bad news keeps coming from Microsoft. The group revealed results at half-mast at the end of 2022 and the threat of a lawsuit by the European Union materializes.
Times are tough for Microsoft. Of course, the company is still one of the world champions with Apple, Alphabet, Amazon and the other giants, but the latest results reflect very accurately what we feel is coming from the economic context.
Turbulence at Microsoft
On the night of January 24-25, Microsoft released the results for the second quarter of the fiscal year. It is very important since it is the one that covers the end of the year celebrations: from October to December 2022.
During this very favorable period for sales, Microsoft announces a 13% drop in the results of its subsidiary Xbox due to the drop in sales of consoles and games and the price drop of certain products during year-end promotions ( Xbox Series S in the lead). It must be said that Microsoft has not been able to launch such important titles on its platform as its direct competitors. Where Nintendo and Sony took all the sales Pokemon et God of WarXbox gamers had to settle for a Repentance they inevitably generate fewer sales.
The video game is not the only branch that has had a bad month: Windows sales drop 39%, the same figure as the drop in Surface sales (-39%). However, this was the release quarter for the Surface Laptop 5, Surface Pro 9, and Surface Studio 2 Plus. These poor results are mainly explained by the economic context: in 2020 and 2021, IT experienced a boom that inflated the results of Windows. Going so quickly from that period to the current recession amplified that impressive 39% drop.
These are the two divisions that were most affected by the 10,000 layoffs announced by Microsoft a few days earlier, as if to better prepare shareholders. Thanks to the press, we have since learned that the Hololens team, the man in charge of mixed reality at Microsoft, and the Bethesda studios and 343 Industries have been greatly affected.
That’s not all, Microsoft now warns that the results for the next quarter will be in the same vein. In the voice of Amy Hood, Microsoft’s finance manager, Windows should continue to fall in the order of 30% and the video game would fall just under 10% in the quarter ending at the end of March.
Despite this bad news, Microsoft still announces a turnover of 52.7 billion dollars for a net profit of 16.4 billion dollars. This result is driven by business and cloud services, which continue to grow.
The shadow of the European Union
The Redmond firm is therefore far from having the best month of January of its existence, but the European Union could still aggravate the situation.
The media political reports that the European Union is preparing to announce an investigation against Microsoft over its policy and the issue of an abuse of dominant position in the field of business services.
In fact, this is a first result of the complaint filed by Slack in 2020 against Microsoft’s policy of integrating its Teams solution with its Microsoft Office 365 services. Slack accuses the company of using the popularity of Microsoft Office to quickly win an unfair market share for Slack. . In 2022, OVHCloud also filed the same type of complaint on the subject.
The European Commission should formalize this file in the near future. This case comes as the EU must also decide on Microsoft’s proposed acquisition of Activision Blizzard. Project that began to falter when the United States began a process against Microsoft in December 2022.
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