Welcome back. Everyone. Today on the Joseph Carlson show, Microsoft, is being sued by the FTC, in order to stop the Activision Blizzard transaction. Now, the FTC is claiming that Microsoft is going to buy up all these gaming companies. Make them exclusive on their Xbox and do more of these monopolistic exclusionary practices. I think this transaction is likely to go through. I think Microsoft will win and
I'll explain why. We also have the CEO of Walmart giving warning signs about the economy and consumer shopping as well as saying similar things to the CEO, that theft is on the rise. We're going to look at the impact of theft on Wal-Mart's business and then, of course, we're finally at the weekend again, and it's time to check in on Tick-Tock this time we have a surprise change. This is something that's actually doing something very interesting. He's scamming scammers.
We're going to look at this video and see how this person is successfully scamming scammers. So obviously we have a lot to jump into. Let's go ahead and start off with the big news, which is Microsoft is being sued by the FTC. Now I'll first say that I do have Get in the game. I own quite a bit of Microsoft stock. I think this is one of the best if not maybe one of the top three companies in the world in terms of overall qualities, Microsoft is an incredibly high
quality company. The company's heavily Diversified and earns very high Returns on Capital employed. This is a measurement for the quality of a business. A business can continue to reinvest back into itself at high returns. That's a big telling sign that this company is a high quality company, a Microsoft earns anywhere. From 20 plus percent Returns on Capital employed, that is very high. So overall, I'm bullish on this company. I'm excited about Microsoft's future.
The one big bearish point that you can really argue about this company in general and the big things that people will say about Microsoft is it's just a little expensive, it's trading at a 26 PE and I get those those frustrations, this company's a little bit pricey in my opinion, over the grand scheme of things over the next 10 to 15 years. I don't think this is too
expensive either. This is a fine price for this level of quality in the business, especially considering the amount of cash that company generates. But one thing that I've highlighted about this company is their growth path part of how they grow when they get to this size, is through acquisition. And one of the companies that Microsoft was excited to buy is Activision Blizzard, Microsoft wanted to buy this company for a $95 per share.
So the company right now is that $75 per share, Microsoft is saying we'll pay you 95 for it. It's a pretty A high price for Activision Blizzard, but because of their cloud computing because of how much access they can give to so many gamers because of how big they could grow this business. It's likely worth the price. Now, there's one problem with this deal and it's this lady right here, the FTC chair Lena
con. She has made it her goal and her intentions to openly State basically how much she hates big Tech. She just doesn't like big companies. Doesn't like that they grow. So big doesn't like, how powerful they get, and she's moved to a position where she A lot of power to interfere with Big Tex Acquisitions. She's the chair of the Ft C Lena, Khan has been against monopolies for a long period of time. This is what she studied for a lot of her life. There's right up from the New
Yorker last year. Looking into her history. She says, quote, it's incredible once you start studying industry structure and see how much consolidation there has been across Industries, every nook and cranny of our economy has Consolidated. I was discovering this new world at one point. She investigated the candy Market I'm nearly 40 brands in her local store that were made by Hershey's Mars and Nestle. In another project about the
raising poultry. She found that most Farmers had to purchase chicks and feed from the giant poultry processors that bought their full grown chickens, which because it had no local competitors could dictate the price, it paid for them. What she brings up here is true. There has been a lot of consolidation throughout Industries and Lena, Khan has put most of our focus on companies like Amazon. And now Microsoft, and we have
some breaking news. Yesterday, that Microsoft is being officially sued by Lena Khan in the FDC. A man, the FTC is suing Microsoft over at 69 billion dollar proposed acquisition of Activision. This lawsuit based on this release were just getting. Now aiming, it's saying mostly focusing on competition and saying, Microsoft has a pattern of acquiring game studios to Snuff out competition in the console Market. What they point to the acquisition of zenimax, which
owns Bethesda softworks. Which they are using to make exclusive titles on here. No, no word on this lawsuit yet from Microsoft. But what they have said all along is look, they are willing to a lot of this hinges on the Call of Duty game, which is Activision's Chief moneymaker, Sony, and some other Rivals have complained that allowing this to go through, would give Microsoft and unfair Advantage by making those titles exclusive, that's right.
The majority of this case, revolves around the big title, which is Call of Duty. Call of Duty, is the massive online multiplayer game. That's first person shooters and they have a bunch of Different franchises under it and they're all money printing machines. This company does so well with this franchise, they just do iterative improvements to the game every single year. They release it and refine it.
They do new experiences. And not only do they charge $60 for most of the games, but they also make money with microtransactions, season passes and lots of different ways of monetizing on top of that. Call of Duty is incredibly valuable IP for Activision Blizzard. This new title that was released, for example, call, Of Duty Modern Warfare 2 which is just one of the many Call of
Duty games. It surpassed 1 billion dollars in sales in less than two weeks 1 billion in sales and this is not the only way they'll monetize it. They'll keep making money with a micro transactions and season passes. So this shows you how valuable this IP is. So the ftc's concern and Sony's concern is that Microsoft will buy up, Activision Blizzard, take the Call of Duty games, which are available on platforms, like PlayStation, and put them Lovely on the Xbox and
a very monopolistic. Anti-competitive way the FTC is saying, quote Microsoft has already shown that it can and will withhold content from its gaming Rivals. Today, we seek to stop Microsoft from Gaining control over a leading independent game studio, and using it to harm competition
in multiple Dynamic and fast. Growing gaming markets, the agency went on to say that Microsoft has made several Bethesda games, including star field and red fall exclusive to its own platform despite giving us. Assurances to European antitrust authorities that it would do otherwise. Now if I had to guess right now I think that the FTC loses this case and I think Microsoft wins the reason why is because I think Microsoft simply has a
stronger case. The first thing that we can look at is the core of the ftc's complaint.
Their whole complaint is that Microsoft will buy up Activision Blizzard and make titles like Call of Duty which are right now available on PlayStation exclusive to the Xbox and do that monopolistic game of just buying things putting them on the Xbox only but my Soft. As already worked to preempt this concern, they said that Microsoft extends off for to Sony for a 10-year deal, over Call of Duty video game.
The deal here is that Microsoft agrees to release every single Call of Duty game on the PlayStation for at least the next decade Microsoft is saying that will put it in writing that we won't be monopolistic. In fact, we want to go out of our way to make this game available to more platforms. And it also doesn't make sense in a business sense to take it off a PlayStation, that's where Call of Duty. It's a lot of their sales, Microsoft is even going further
out of its way to make itself. Less monopolistic over its titles. They say that they want to bring the game to the Nintendo switch for the next 10 years as well. So not only on the PlayStation, but also on the Nintendo switch in. This is why I think Sony's actually throwing a fit over. This Sony is worried that Microsoft is going to make their games more available on
different devices. Outside of just the consoles, Microsoft is going to make their core titles, which right now are just on. Cuter PlayStation and Xbox, they're going to make them available on the Nintendo as well. And maybe on iPads for those who have been following, Microsoft's overall gaming strategy, it is the complete opposite of exclusionary. What they're trying to do is make their games. Basically ubiquitous a part of society in every single platform
available. They say that Phil Spencer has ambitious plans to grow its gaming business from primarily Xbox consoles to cloud services subscription platforms. And screens of all sizes. And if the game pass platform, is the engine to make it happen. The acquisition of Activision, Blizzard is a major source of fuel.
So they want screens of all sizes anywhere, where you have a screen, whether that's your phone, your iPad, your Apple TV, whether it's the Nintendo switch or whether it's the PlayStation, they want you to be able to enjoy Call of Duty. And again, I think this is the reason that PlayStation does not want this to take place PlayStation is complaining about Microsoft and their monopolistic practices while PlayStation has a far more popular console than the Xbox.
And the PlayStation console is far more exclusionary than the Xbox. And I think to argue that Microsoft is being more exclusionary than PlayStation is going to be a very uphill battle for the FDC and Microsoft knows that while we believe in giving peace, a chance we have complete confidence in our case and welcome the opportunity to present our case in court. He says that we've given peace a chance. Now it's time for war, we can go in and prove in court that we have the better case.
Microsoft is not backing down and we have the opportunity to see a couple of the arguments that they may give in court. Because recently Microsoft responded to a bunch of different complaints from the EU Regulators basically asserting the same thing. They're reiterating PlayStations complaints. A lot of these complaints come right from PlayStation, Sony PlayStation has been the largest console platform for over 20 years with an install base of
over 150 million consoles. Making it larger than and tendo and more than double the size of Xbox. Even Microsoft made Call of Duty exclusive to the Xbox. The numbers currently show that PlayStation gamer base would still remain significantly larger than the Xbox's today. Sony's also buying game studios they purchase bungee which made Destiny to the developer for 2022 Zelda and ring this complements Sony's existing minority share and epic games
publisher of fortnight strong. First party game catalog and extensive portfolio of exclusive arrangements with third-party Publishers. There were over 280 exclusive. First and third party titles on Playstation in 2021. So Sony is complaining. The Xbox, might make one or two games exclusive when right now, Sony has over five times as many exclusive games and over double the amount of Gamers on their platform and these rebuttals go on and on and I think they're
very strong arguments. Microsoft says they have no intention to take Call of Duty away from Gamers indeed as publicly committed, not to do so. So Microsoft is pointing out that it doesn't even make economic sense to take their game. Off the PlayStation, they'd lose like two-thirds of their revenue from these games and Microsoft goes on to take a shot at Sony's saying that Sony is not really worried about Microsoft taking
their games off. Sony what they're worried about is making those games available to more Gamers on different platforms and Sony Xbox plans to make Call of Duty franchise available, to more gamers in more ways than would have been the case in the counterfactual. While this increased competition will benefit Gamers, it has not been welcomed by the market leader. Sony remember, Sony has no interest. They do not want the Call of Duty franchise to be available on the Nintendo switch.
Microsoft does, Sony doesn't one of these companies is being monopolistic in a way that harms consumers and that's Sony. So I really think the ftc's going to lose this battle. I don't see any way they win it. They have a much weaker case, Microsoft can show that Sony is actually the one being monopolistic here. They're the one trying to make all of their titles exclusive. They're trying to prevent Microsoft from putting the game on different devices, making it
more available more. - across gaming platforms. I just think that the FTC has a very, very uphill battle here. Now, moving on, we got to talk about the economy and the Chance was going into recession. Before that we have a quick mention from today's sponsor. The sponsor of today's video is M1. Finance I started using them on finance literally five years ago back in 2017. I uploaded my first YouTube video in 2019 so I've been using this platform for years even before ever doing YouTube.
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that you're transferring. So if you're interested in, trying out M on finance, for yourself, use the link in the description below. Now, we just had Costco's earnings report, which is one of the bigger Holdings in my portfolio and the CEO of Costco did note that there's some recessionary signs that he sing people are trading down with what they're buying and then we also had Walmart's earning
report. Which was also fine but Walmart's a much bigger company than Costco is probably a better measurement of how the overall economy is doing. Here's a CEO of Walmart talking about the current state of the economy and different shopping habits. We've got some customers who more budget-conscious that have been under inflation pressure. Now, for months.
Now really started changing in March April of this year and that sustained pressure in some categories, I think is something that customers are having to deal with as we approach Christmas. You also have though, a growing number of customers who make Over a hundred thousand dollars. I think that's where a lot of Dave is coming. Yeah, a lot of our growth, the last couple of quarters has come from people that are coming to Walmart to save money.
So we're seeing an uptick in Shoppers making over a hundred thousand dollars shopping at Walmart.
And I think these are Shoppers that are downgrading from the whole foods from the targets and from the other high-margin stores going to the lowest margin stores, like Costco and Walmart, the next thing that the Walmart's CEO talks about is a concern that Target highlighted as a huge problem, which is theft people just going into these stores and taking whatever they can fit into their pockets walking out and stealing whatever items they can concept is an issue.
It's higher than what has historically been and we've got safety measures security measures that we put in place by store location. I think local law enforcement being staffed and being a good partner is part of that equation and that's normally how we approach it. So lawmakers have made it in many cases so that you can still a certain amount of items without facing harsh charges.
You're not really faced with legal penalties, if you only still a small amount of items, Have been rules that have been changed. That make it, not something that the police are going to prosecutor that. The criminals won't be prosecuted below certain levels, does that matter. If that's not corrected over time prices will be higher, right? And or stores will close how much? This is something that I think a lot of people don't understand.
A lot of people justify stealing stuff from stores like this, because they believe it's the company that takes to hit, but it's never the company that takes to hit. All it does is make prices higher across the board for everyone else. They're not stealing from Walmart as much as they are from.
One else. Everyone else is paying for that theft with higher prices or if there's too much crime across the board, it's too expensive for Walmart to operate, how they function as a retailer and a police force. So they can only do one of those things if it gets so bad. That so many things are getting stolen, they'll just closed the location entirely. So right now between all the Retailer's, I'm happy, owning Costco, I think this one's very
defensive. I think the value proposition will make it recessionary resistant and it's not one that's easy to steal from because of the way that cost Coast. Pictures their stores companies like Target. I think will struggle a little bit more. I know this is one of my Holdings but it's one that I'm a little bit more concerned about going into 2023. And I think that retailers like Dollar General and Walmart will do better in a struggling
economy. Now, moving on, we finally got to the weekend, it's time to check in on Tick-Tock. This is where we get the best tips. The best advice across the web is with these short tick-tocks. This one's actually a little bit surprising because most of these tick-tocks that I've highlighted are just awful, but this is one where This individual has worked hard to get Vengeance on scammers. Listen to his little reverse scam that he's come up with. I'm going to show you how I scam
scammers. I find scammers easily by going to any video related to finance or investment and they usually list a WhatsApp number that they want you to message. Those are the exact type of messages that I receive on. Basically every video, they'll be spammed with comments that say contact Joseph Carlson's WhatsApp. Spoiler alert, I don't have a WhatsApp anytime. Wants to contact you on WhatsApp and they say that their deals of Carlson. It's not me.
So what he's doing here is contacting these obvious scammers. I then message them saying that I'm ready to invest here. I said that I have 20,000 dollars and I'm ready to give it to him and he's like, well I can return a hundred forty thousand dollars by the end of the week. Wow that's a great investment. I then send the scammer, a video of me, sending them to ten thousand dollars on cash app just like this. Except this isn't cash app know, it's a fake version. I programmed.
And to the scammer, it looks like I said ten thousand dollars but it also looks like that cash app is holding the money away from the scammer because the amount is too large and I've never set money this person before. So this guy went through all the effort of programming, this fake cash app app, then it records himself sending the scammer, a fake ten thousand dollars which is fake app says, hey that person needs to send you $50 to release this money.
This is literally how these scams work, there's always a big, a big pile of gold at the end of the rainbow. And to get that pile of gold, you just have to give a little bit of money right now. That's what these scammers do and is doing the exact same thing against them and because these scammers are so greedy. So willing to rip people off, they're willing to pay the $50, you know, for security purposes and one after another, they send me money.
And then he has a whole list of these scammers that have sent in between $50 and $75. So my first reaction here is this is a bit genius. The fact that he was able to create this fake app and be able to make it. So these scammers get a little bit of their own medicine, I think is remarkable. One note on this though, I'm pretty sure this is also illegal. I don't think it's legal to scam people even if they're bad people and even if they're trying to scam you.
So even though I don't think anyone's going to go out of their way to press charges against them. I wouldn't advise doing this. I think it's probably against the law, but even so I can't say, I feel too bad for these people. Now, that's all for this episode. I hope you enjoyed and I'll see you in the next one. One note on this though, I'm pretty sure this is also illegal. I don't think it's legal to scam people even if they're bad people and even if they're trying to scam you.
So even though I don't think anyone's going to go out of their way to press charges against them. I wouldn't advise doing this. I think it's probably against the law, but even so I can't say, I feel too bad for these people. Now, that's all for this episode. I hope you enjoyed and I'll see you in the next one.