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
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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.