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Technology

Microsoft responds to FTC attempt to block Activision Blizzard deal

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Microsoft on Thursday filed its response to U.S. regulators’ antitrust case attempting to block the software maker from buying video-game publisher Activision Blizzard.

The Federal Trade Commission’s challenge to the proposed $68.7 billion acquisition stands out as the biggest government pushback Microsoft has dealt with on home turf since facing off against the Justice Department two decades ago over the dominance of Windows in the operating system market.

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Under President Donald Trump, Google’s umbrella company Alphabet, Apple, Amazon and Facebook parent Meta all faced inquiries from U.S. competition officials. That left Microsoft to go about its business and continue expanding with acquisitions through the election of President Joe Biden, even after Biden’s appointee, technology critic Lina Khan, took over at the FTC. But then Microsoft revealed its plan to buy Activision Blizzard. On Dec. 8 the FTC argued that the transaction would violate federal law.

“Even with confidence in our case, we remain committed to creative solutions with regulators that will protect competition, consumers, and workers in the tech sector,” Brad Smith, Microsoft’s president and vice chair, said in a statement provided to CNBC. “As we’ve learned from our lawsuits in the past, the door never closes on the opportunity to find an agreement that can benefit everyone.”

To relieve government opposition to the deal, Microsoft has offered concessions.

In October Phil Spencer, CEO of Microsoft’s gaming unit, said Microsoft had committed to bringing Activision Blizzard’s Call of Duty games to Nintendo consoles for a decade and keeping the games on Valve’s Steam game store. Microsoft has also offered to sign a 10-year agreement with Sony to release Call of Duty games on PlayStation consoles on the same day they reach Microsoft Xbox consoles. “Sony refuses to deal,” Microsoft said in its filing.

Activision Blizzard has not made its new games available through subscription services such as Microsoft’s Game Pass, and the acquisition would make playing Activision Blizzard’s games more affordable, Microsoft said.

“The acquisition of a single game by the third-place console manufacturer cannot upend a highly competitive industry,” Microsoft said in its response. “That is particularly so when the manufacturer has made clear it will not withhold the game. The fact that Xbox’s dominant competitor has thus far refused to accept Xbox’s proposal does not justify blocking a transaction that will benefit consumers.”

Microsoft said that after taking almost a year to investigate the deal and examining millions of documents from Activision Blizzard and Microsoft, the FTC has not shown evidence that Microsoft is looking to yank the game series from PlayStation. Ensuring the games will be widely available is good for business, the company said.

Outside the U.S., Brazil gave the OK for the deal to proceed, while the United Kingdom has been scrutinizing it.

Microsoft pushed back on the FTC’s assertions.

For example, the FTC said in its lawsuit that Microsoft had promised the European Commission that it wouldn’t have a motivation to prevent people from playing games from ZeniMax, a game publisher Microsoft acquired in 2021, on consoles other than the Xbox, but after receiving approval for the ZeniMax deal from the European Commission, the company said it would be making some ZeniMax games exclusive.

“The European Commission agrees it was not misled, stating publicly the day after the complaint that Microsoft did not make any ‘commitments’ to the European Commission,” Microsoft said, “nor did the European Commission ‘rely on any statements made by Microsoft about the future distribution strategy concerning ZeniMax’s games.'”

Members of the public sent more than 2,100 emails to the UK’s Competition and Markets Authority in response to a statement from the agency describing three ways the deal could lessen competition. Around 75% of the emails expressed support for the acquisition, the agency said on Wednesday.

If the deal does close, Microsoft would be “the world’s number three gaming company by revenue, behind Tencent and Sony,” Spencer said on a conference call on the day of the deal announcement.

In the months since then, two groups of Activision Blizzard employees have voted to form unions. Microsoft has said it’s committed to efforts that would make it easier for employees to decide on whether to join or start a union.

This is breaking news. Please check back for updates.

WATCH: Gaming to benefit from being largely platform agnostic, says Cowen’s Doug Creutz

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Business

Sam Bankman-Fried will now surrender himself for extradition before Bahamian court Monday: Source

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FTX founder Sam Bankman-Fried (2nd L) is led away handcuffed by officers of the Royal Bahamas Police Force in Nassau, Bahamas on December 13, 2022. 

Mario Duncanson | AFP | Getty Images

FTX founder and former CEO Sam Bankman-Fried will no longer contest extradition to the U.S., an about-face just days after he was remanded to Bahamian jail pending a hearing, a person familiar with the matter told CNBC.

The former crypto billionaire will appear in Bahamian court this Monday to formally waive his extradition rights, paving the way for federal authorities to secure his return to the U.S.

Extradition between the Bahamas and the U.S. is codified by a 1991 treaty. In practice, the process takes months, if not years, to complete because the accused have numerous chances to appeal. Bankman-Fried’s legal team had initially said that it planned to fight extradition. The change of heart would move up the timeline for Bankman-Fried’s federal trial significantly.

The 30-year-old MIT graduate was originally scheduled for his next hearing in February 2023.

A representative for Bankman-Fried declined to comment.

Bankman-Fried was indicted in New York federal court on Monday, on charges of wire fraud, securities fraud, conspiracy to defraud the United States, and money laundering. If sentenced, he could face the rest of his life in prison. The former FTX CEO also faces concurrent charges from the Securities and Exchange Commission and the Commodity Futures Trading Commission over similar allegations that he worked to defraud FTX customers of billions of dollars since 2019, the year the exchange was founded.

At the heart of Bankman-Fried’s empire was Alameda Research, a crypto hedge fund that federal regulators allege used FTX customer money to engage in trading which lost billions of dollars.

FTX’s collapse was precipitated when reporting by CoinDesk revealed a highly concentrated position in self-issued FTT coins, which Bankman-Fried’s hedge fund Alameda Research used as collateral for billions in crypto loans. Binance, a rival exchange, announced it would sell its stake in FTT, spurring a massive withdrawal in funds. The company froze assets and declared bankruptcy days later. Charges from the SEC and CFTC indicated that FTX had commingled customer funds with Bankman-Fried’s crypto hedge fund, Alameda Research, and that billions in customer deposits had been lost along the way.

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Business

Marc Benioff says newer Salesforce employees are less productive

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Marlena Sloss | Bloomberg | Getty Images

Salesforce co-CEO Marc Benioff told employees in a Slack message on Friday that the company’s newest hires aren’t being productive enough, and he asked for feedback as to why that’s the case.

“Are we not building tribal knowledge with new employees without an office culture?” he asked in a message viewed by CNBC. He said he was “asking for a friend,” a phrase people often use on the internet to humorously reveal their curiosity about a topic. The message included an emoji showing a smiling face with a halo hovering over it, suggesting innocence.

Benioff’s companywide message addresses what’s become a hot-button issue in Silicon Valley. Since the arrival of Covid sent workers home almost three years ago, companies have been trying to reimagine a future workplace that allows more employee flexibility than in the past. Some businesses have allowed employees to work from anywhere permanently.

Salesforce, the biggest private employer in San Francisco, was among the first tech companies to tell its workforce they didn’t have to come back. Last year, Salesforce acquired communications app Slack, and Benioff said people can work very effectively from their homes. Salesforce said it would let teams decide how much time they would be in office.

But Benioff may be recognizing some of the challenges remote work presents. On Friday he highlighted an issue that he said was affecting employees who joined Salesforce this year and last. Salesforce’s headcount grew by 32% in the past year, and last month it cut hundreds of jobs.

A Salesforce spokesperson declined to comment on Benioff’s message but sent a statement on the company’s policy.

“We have a hybrid work environment that empowers leaders and teams to work together with purpose,” the spokesperson wrote. “They can decide when and where they come together to collaborate, innovate, and drive customer success.”

Benioff is contending with slowing revenue growth as the economy weakens, and a thinning of the upper ranks within Salesforce. Last month, the company said Bret Taylor would be stepping down from his position as co-CEO in January. He’d just been promoted to share the top job with Benioff a year earlier. And days later, Slack CEO Stewart Butterfield announced his departure.

Here’s the full text of Benioff’s Slack post:

How do we increase the productivity of our employees at salesforce? New employees (hired during the pandemic in 2021 & 2022) are especially facing much lower productivity. Is this a reflection of our office policy? Are we not building tribal knowledge with new employees without an office culture? Are our managers not directly addressing productivity with their teams? Are we not investing enough time into our new employees? Do managers focus enough time and energy on onboarding new employees & achieving productivity? is coming as a new employee to salesforce too overwhelming? Asking for a friend. (Im leaving this open ended to get the broadest level of response.)

The message prompted a variety of comments.

Some reacted with an emoji stating “THIS” alongside an up arrow. Others chose emojis that read “WFH” or “citation needed.” Dozens went with a standard emoji known as thinking face.

Benioff chimed in again in the responses.

“Asking hard questions of employees (and customers and each other) for their answers is one of the most effective ways to get answers as a leader today,” he wrote. “It’s why we bought Slack because there is no better way to ask questions and crowd source answers quickly. Already today we have almost 500 replies to these questions — amazing and incredibly useful!”

He was displeased that his message found its way to the press, ultimately ending up on Twitter. 

“I hope you will agree it is also disappointing that our private conversations here were almost immediately given to the public media,” he wrote. “I wonder how do we reinforce that Trust is our highest company value? How do we demonstrate the power of Trust and Transparency without an immediate public disclosure. It gets to the heart of who we are at salesforce.”

His responses were shared with CNBC.

WATCH: Salesforce co-CEO Marc Benioff on Bret Taylor’s departure from the company

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World

FTX founder Sam Bankman-Fried arrested in the Bahamas

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CEO Sam Bankman-Fried

Bloomberg | Bloomberg | Getty Images

FTX founder Sam Bankman-Fried was arrested by Bahamian authorities Monday evening after the United States Attorney for the Southern District of New York shared a sealed indictment with the Bahamian government, setting the stage for extradition and U.S. trial for the onetime crypto billionaire at the heart of the crypto exchange’s collapse.

Before his arrest was announced, Bankman-Fried had been expected to testify virtually before the House Financial Services Committee on Tuesday, but his attorneys told CNBC that he will not testify.

His arrest is the first concrete move by regulators to hold individuals accountable for the multi-billion dollar implosion of FTX last month.

Damian Williams, the U.S. Attorney for the Southern District of New York, said on Twitter that the federal government anticipated moving to “unseal the indictment in the morning.” The New York times reported that the charges include wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering, according to the New York Times, citing a person familiar with the matter.

Bahamas Attorney General Ryan Pinder said that the United States was “likely to request his extradition.” The Royal Bahamas police force confirmed his arrest and said he would appear in magistrate court in Nassau on Tuesday.

In a statement, Bahamian Prime Minister Philip Davis said, “The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law.”

“While the United States is pursuing criminal charges against SBF individually, The Bahamas will continue its own regulatory and criminal investigations into the collapse of FTX, with the continued cooperation of its law enforcement and regulatory partners in the United States and elsewhere,” continued the statement.

Bahamian regulators and FTX’s attorneys had been engaged in a bruising battle in chambers and in the court of public opinion. Earlier Monday, FTX attorneys accused the Bahamian government of allegedly working with Bankman-Fried to spirit away FTX assets from company control and into into crypto wallets controlled by Bahamian regulators.

Bankman-Fried’s arrest by Bahamas law enforcement, as well as his expected extradition, suggest that close cooperation between the Bahamas and the U.S. will continue to evolve throughout the bankruptcy proceedings. The Bahamas and the United States have had an extradition treaty in place since the early 20th century, when the Bahamas was still under British control. The current treaty was signed in 1990 and requires that the requesting party provide an arrest warrant issued by a judge or “other competent authority.”

In November, FTX and its affiliates filed for bankruptcy and Bankman-Fried stepped down from his role as CEO. The crypto trading firm imploded in spectacular fashion following a run on assets similar to a bank run.

FTX’s collapse was precipitated when reporting from CoinDesk revealed a highly concentrated position in self-issued FTT coins, which Bankman-Fried’s hedge fund Alameda Research used as collateral for billions in crypto loans. Binance, a rival exchange, announced it would sell its stake in FTT, spurring a massive withdrawal in funds. The company froze assets and declared bankruptcy days later. Reports later claimed that FTX had commingled customer funds with Bankman-Fried’s crypto hedge fund, Alameda Research, and that billions in customer deposits had been lost along the way.

Bankman-Fried was replaced by John J. Ray III, who had overseen Enron’s bankruptcy. Ray is also scheduled to testify before Congress this week. In prepared remarks released Monday, Ray said that FTX went on a “spending binge” from late 2021 through 2022, when approximately “$5 billion was spent buying a myriad of businesses and investments, many of which may be worth only a fraction of what was paid for them,” and that the firm made more than $1 billion in “loans and other payments…to insiders.”

Ray also confirmed media reports that FTX customer funds were commingled with assets from Alameda Research. Alameda used client funds to do margin trading, which exposed them to massive losses, Ray said.

Legal experts told CNBC that if the federal government pursues wire or bank fraud charges, Bankman-Fried could face life in prison without the possibility of supervised release. Such a severe punishment would be unusual but not extraordinary. Ponzi scheme mastermind Bernie Madoff was sentenced to 150 years in prison, an effective life sentence, for his massive ponzi scheme. FTX’s collapse has already triggered the demise of BlockFi Lending, and has thrown the entire space into disarray.



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Science

SpaceX launches Japanese ispace lunar lander first mission

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A long exposure photo shows the path of SpaceX’s Falcon 9 rocket as it launched the ispace mission on Dec. 11, 2022, with the rocket booster’s return and landing visible as well.

SpaceX

Japanese lunar exploration company ispace began its long-anticipated first mission on Sunday, with a SpaceX Falcon 9 rocket launching the venture’s lunar lander from Florida.

“This is the very, very beginning of a new era,” ispace founder and CEO Takeshi Hakamada told CNBC.

The Tokyo-based company’s Mission 1 is currently on its way to the moon, with a landing expected near the end of April.

Founded more than a decade ago, ispace originated as a team competing for the Google Lunar Xprize under the name Hakuto – after a mythological Japanese white rabbit. After the Xprize competition was canceled, ispace pivoted and expanded its goals, with Hakamada aiming to create “an economically viable ecosystem” around the moon, he said in a recent interview.

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The company has grown steadily as it worked toward this first mission, with over 200 employees around the world – including about 50 at its U.S. subsidiary in Denver. Additionally, ispace has steadily raised funds from a wide variety of investors, bringing in $237 million to date through a mixture of equity and debt. The investors of ispace include the Development Bank of Japan, Suzuki Motor, Japan Airlines, and Airbus Ventures.

The ispace Mission 1 lander carries small rovers and payloads for a number of government agencies and companies – including from the U.S., Canada, Japan, and the United Arab Emirates.

The ispace Mission 1 spacecraft deploys from the upper stage of the Falcon 9 rocket on Dec. 11, 2022.

SpaceX

Before the launch, ispace outlined 10 milestones for the mission – with the company having completed the first three so far: Preparation for launch, deployment after launch, and then establishing a communication link. Next up is to maneuver in orbit, and then a one-month period flying through space before entering the moon’s orbit. The milestones demonstrate the complexity and difficulty of ispace’s mission, with Hakamada emphasizing both his confidence in the mission, as well as noting that each milestone represents another step forward for the company’s goals.

“I have 100% trust in our engineering team, they have been doing the right things to accomplish our successful landing on the lunar surface,” Hakamada said.

If successful, ispace would be the first private company to land on the moon – a feat previously accomplished by global superpowers.

The lunar landeer for the company’s Mission 1.

ispace

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Business

Amazon, Google, Microsoft, Oracle get $9 billion Pentagon cloud deals

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The Pentagon building in Washington, D.C.

Staff | AFP | Getty Images

The Pentagon said Wednesday that Amazon, Google, Microsoft and Oracle each received a cloud-computing contract that can reach as high as $9 billion each through 2028.

The outcome of the Joint Warfighting Cloud Capability, or JWCC, effort is in line with the U.S. Defense Department’s effort to rely on multiple providers of remotely operated infrastructure technology, as opposed to relying on a single company, a strategy promoted during the Trump Administration.

An increasing tally of businesses have also sought to rely on more than one cloud provider. In some cases they rely on specialized capabilities on one and the majority of front-end and back-end workloads on another. At other times, they come down to cost. Having more than one cloud might make organizations more confident that they can withstand service disruptions brought on by outages.

Originally, the Pentagon had awarded the Joint Enterprise Defense Infrastructure, or JEDI, to Microsoft in 2019. A legal battle ensued as Amazon, the top player in the cloud infrastructure market, challenged the Pentagon’s decision. Oracle challenged the Pentagon’s pick as well.

In 2020, the Pentagon’s watchdog conducted a review and ruled that there was no evidence to conclude that the Trump Administration had intervened in the process of awarding the contract. Months later the Pentagon announced it would stick with Microsoft for the JEDI deal.

Last year the Pentagon changed its approach, asking for bids from Amazon, Google, Microsoft and Oracle to address cloud needs. But the General Services Administration stated at the time that only Amazon and Microsoft seemed to be able to meet the Pentagon’s requirements.

Wednesday’s result is a boon in particular for Oracle, which analysts don’t see in the top tier of companies offering cloud-based computing services. Oracle generated $900 million in cloud infrastructure revenue in the quarter that ended Aug. 31, a small fraction of the $20.5 billion total for Amazon’s cloud subsidiary, Amazon Web Services, in the third quarter.

All four of the technology companies have won indefinite delivery, indefinite quantity, or IDIQ, contracts, meaning that they can involve an indefinite amount of services for a specific period of time.

“The purpose of this contract is to provide the Department of Defense with enterprise-wide globally available cloud services across all security domains and classification levels, from the strategic level to the tactical edge,” the Defense Department said.

WATCH: Roughly 75% of our customers use multi-cloud and data centers, says VMware CEO

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Business

Salesforce (CRM) earnings Q3 2023

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Salesforce cofounder and co-CEO Marc Benioff speaks during the grand opening of the Salesforce Tower, the tallest building in San Francisco, Calif., Tuesday, May 22, 2018.

Karl Mondon | Bay Area News Group | Getty Images

Salesforce reported earnings and revenue on Wednesday that beat analyst expectations. It also announced that co-CEO Bret Taylor is stepping down. CEO and Salesforce co-founder Marc Benioff will the be sole person in charge of the company.

Salesforce stock fell over 6% in extended trading.

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What investors are watching when Salesforce reports 3Q results on Wednesday

Here’s how the company did versus Refinitiv consensus estimates for the quarter ending in October:

  • EPS: $1.40, adjusted, versus $1.21 expected by analysts
  • Revenue: $7.84 billion versus $7.82 billion expected by analysts

Salesforce said it expected between $7.9 billion to $8.03 billion in revenue in the company’s fourth fiscal quarter, lower at the midpoint than analyst expectations of $8.02 billion in sales in the fourth quarter. The company also said it would take a $900 million hit in sales because of foreign currency effects.

Salesforce’s total revenue increased 14% year-over-year. Last quarter, Salesforce trimmed its year-end estimates for both revenue and earnings, citing a weaker economic cycle. It reaffirmed those estimates on Wednesday.

Salesforce said that its operating cash flow came in at $313 million for the quarter, which was a decrease of 23% year-over-year.

Subscription and support revenue, which includes the company’s flagship Sales Cloud software and comprises the majority of the company’s sales, came in at $7.23 billion, which was up 13% year-over-year.

The Platform and Other category that includes Slack reported $1.51 billion in sales, an 18% increase year-over-year.

Salesforce spent $1.7 billion on share repurchases during the quarter, the company said.

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Business

Popular tax prep software sent financial information to Meta: report

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Meta (formerly Facebook) corporate headquarters is seen in Menlo Park, California on November 9, 2022.

Josh Edelson | AFP | Getty Images

Popular tax prep software including TaxAct, TaxSlayer and H&R Block sent sensitive financial information to Facebook parent company Meta through its widespread code, known as a pixel, that helps developers track user activity on their sites, an investigation by The Markup found.

In a report published with The Verge on Tuesday, the outlet found the software sent information like names, email addresses, income information and refund amounts to Meta. The Markup discovered the data trail through a project earlier this year with Mozilla Rally called “Pixel Hunt,” where participants installed a browser extension that sent the group a copy of data shared with Meta through its pixel.

“Advertisers should not send sensitive information about people through our Business Tools,” a Meta spokesperson told CNBC in a statement. “Doing so is against our policies and we educate advertisers on properly setting up Business tools to prevent this from occurring. Our system is designed to filter out potentially sensitive data it is able to detect.”

Meta considers potentially sensitive information to include information about income, loan amounts and debt status.

The Markup also found that TaxAct had transmitted similar financial information to Google via its analytics tool, though that data did not include names.

“Any data in Google Analytics is obfuscated, meaning it is not tied back to an individual and our policies prohibit customers from sending us data that could be used to identify a user,” a Google spokesperson told CNBC. “Additionally, Google has strict policies against advertising to people based on sensitive information.”

Representatives for the tax prep services did not immediately respond to CNBC’s request for comment.

Read the full report on The Verge.

Subscribe to CNBC on YouTube.

WATCH: Facebook battles Apple over user privacy features in iOS update

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Business

Elon Musk sets more in-office requirements at Twitter

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SpaceX owner and Tesla CEO Elon Musk speaks during a conversation with legendary game designer Todd Howard (not pictured) at the E3 gaming convention in Los Angeles, California, June 13, 2019.

Mike Blake | Reuters

A pair of new emails from Elon Musk to Twitter employees says managers must meet in-person with employees — even exceptional ones — at least monthly, and says managers can be terminated for allowing employees to work remotely if they are not “exceptional.”

In a pair of emails sent within the same hour on the afternoon of Nov. 17, Elon Musk said, “Regarding remote work, all that is required for approval is that your manager takes responsibility for ensuring that you are making an excellent contribution. It is also expected that you have in-person meetings with your colleagues on a reasonable cadence, ideally weekly, but not less than once per month.”

Musk went on to threaten managers who don’t uphold his guidelines.

“At the risk of stating the obvious, any manager who falsely claims that someone reporting to them is doing excellent work or that a given role is essential, whether remote or not, will be exited from the company.”

In the email, Musk does not give any guidelines on what constitutes “excellent work.”

The emails come after Musk closed a $44 billion acquisition of Twitter at the end of October, and quickly moved to cut half of the company’s full-time workforce, amounting to roughly 3,700 jobs, and a large swathe of contractors.

One of Musk’s first moves was to reverse the company’s previous “work from home forever” policy, which had been enacted by a personal friend and collaborator of Musk, former Twitter CEO Jack Dorsey.

On Thursday, Musk wrote in a pair of team emails: “Going forward, to build a breakthrough Twitter 2.0 and succeed in an increasingly competitive world, we will need to be extremely hardcore. This will mean working long hours at high intensity. Only exceptional performance will constitute a passing grade.”

He also said he would be fine with people who are “performing at an exceptional level” staying remote if they couldn’t make it in but that he preferred in-office collaboration. But at the time, employees told CNBC they had not gotten formal guidance from HR on remote work.

Here are the emails, transcribed by CNBC:

From: Elon Musk

To: Team at Twitter

Date: Nov. 17, 2022 [Time Stamp removed]

Subj. re: Fork in the Road

Regarding remote work, all that is required for approval is
that your manager takes responsibility for ensuring that
you are making an excellent contribution.

It is also expected that you have in-person meetings with
your colleagues on a reasonable cadence, ideally weekly,
but not less than once per month.

And:

From: Elon Musk

To: Team at Twitter

Date: Nov. 17, 2022 [Time Stamp removed]

Subj. re: Fork in the Road

At risk of stating the obvious, any manager who falsely
claims that someone reporting to them is doing excellent
work or that a given role is essential, whether remote or
not, will be exited from the company.

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Business

Microsoft Satya Nadella is ‘very bullish’ on Asia, China and India

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Satya Nadella, chief executive officer of Microsoft Corp., during the company’s Ignite Spotlight event in Seoul, South Korea, on Tuesday, Nov. 15, 2022. Nadella gave a keynote speech at an event hosted by the company’s Korean unit. Photographer: SeongJoon Cho/Bloomberg via Getty Images

SeongJoon Cho | Bloomberg | Getty Images

The CEO of Microsoft says he is bullish about Asia, especially China and India, as Microsoft plans to build more data centers around the world.

“Absolutely. We’re very, very bullish about what’s happening in Asia,” Satya Nadella, chairman and CEO of Microsoft, told CNBC’s Tanvir Gill in an interview Thursday, adding that Microsoft is investing in at least 11 regions.

“We’re absolutely committed to all of these countries and in China too. Today, we primarily work to support multinational companies that operate in China and multinational companies out of China.”

He also added that India has been a “massive growth market” after emerging from the pandemic.

“Microsoft’s presence in India was about mostly multinational companies operating in India. But for now, it’s completely changed,” he said.

“It’s the reverse where these companies who are innovating in India, whether it’s the big large conglomerates, or the new startups, are all using [artificial intelligence] cloud technology to be able to innovate and create services that are obviously popular in India and elsewhere,” he told CNBC.

Microsoft previously told Indian media outlet Economic Times that there’s a huge demand in development of new native cloud applications in India.

Tech layoffs

As U.S. tech giants face mass layoffs, Nadella said he was optimistic about the labor market there.

Microsoft in October announced a round of layoffs affecting less than 1% of its employees. Meanwhile, Meta is cutting 11,000 workers, while Snap is laying off more than 1,000 people.

“The current labor markets are much more resilient,” said Nadella, adding that most companies from energy firms to banks and retailers need software engineers.

He added that no industry is immune to macroeconomic issues. “So everyone has to manage the costs and demand properly,” he said.

“One of the fascinating things about the U.S. is the amount of capital that’s getting invested,” he said, adding that new industrial infrastructure such as fabrication plants, power plants and battery factories are being built.

“I am much more focused on observing where what is happening in terms of new growth inside the United States. So I’m very, very optimistic about the U.S. and the world.”

Nadella replaced billionaire Steve Ballmer as Microsoft CEO in 2014. Prior to that, Nadella was executive vice-president of Microsoft’s cloud and enterprise group.

Microsoft shares were at $241.73 in after-hours trade. Shares have dropped 27.8% year-to-date.

— This is a developing story. Please check back for updates.

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