New Microsoft and Netflix partnership raises acquisition rumors

Analysts are suggesting that Microsoft could be preparing for another shocking acquisition, this time for streaming giant Netflix.

Microsoft shook the gaming world at the beginning of the year, announcing the purchase of Activision Blizzard for a whopping $70bn. And it looks like the company could be eyeing up yet another acquisition.

Announced on July 14, Microsoft will be the exclusive partner in helping Netflix make its service “more affordable” by serving ads to its 220M users.

However, analysts seem to believe that the partnership might conceal “a hidden agenda” and suggest Microsoft may be looking to purchase Netflix in the future.

Netflix and Microsoft have partnered up to bring ads to the streaming service, but an acquisition could be on the cards according to analysts.

Is Microsoft buying Netflix?

According to Needham senior analyst Laura Martin, the recent advertising deal could suggest that the streaming service is looking to be acquired by Microsoft.

“It could be that Netflix is looking for an exit,” the analyst told Yahoo Finance. “Netflix is trying to get closer to Microsoft in hopes that, after Microsoft digests its Activision acquisition, it turns and buys Netflix next,” she added.

Laura went on to explain how the tech giant Microsoft, with a market cap of almost two trillion, could be one of the only companies that have the means to make such a huge $84B acquisition happen without financial constraints or regulatory issues.

Additionally, the analyst noted that Microsoft doesn’t have all that much experience in the ad-tech business, making the partnership with Netflix even more peculiar.

However, with Google reportedly making a staggering $147 billion from ads alone last year, it’s no wonder Microsoft has jumped at the opportunity to get involved. But, only time will tell if purchasing the streaming giant is on the table.