It’s official: EA is going private.
The leveraged buyout will be financed by a staggering $20 billion of debt, which likely means some *aggressive* cost cutting is ahead for EA in the coming months and years.
https://www.businesswire.com/news/home/20250929186526/en/EA-Announces-Agreement-to-be-Acquired-by-PIF-Silver-Lake-and-Affinity-Partners-for-%2455-Billion
In a deal involving a company owned by Jared Kushner, a company that is basically just the Saudis, and $20B of debt.
Depends. This is a leveraged buyout and there are countless examples of other companies bought like this and they don’t last long.
They take on massive debt to buy it. Then they shift that debt to the company they bought and away from the individuals. Then that company is crippled paying down interest so they can’t innovate (not that EA did), then they’ll have to cut costs and the product will diminish. Likely pay out billions in dividends to the buyers can make profit and in 5-10 years EA will go bust or get sold again.
The banks will be left holding the bag, but probably covered their loses by that time so can write off the rest of the debt.
It’s being bought by blood money (Kushner’s $2billion investment/bribe to hush up the US government about the brutal murder of a US resident journalist at the hands of the Saudis). Plus a country that somehow is even more squeamish about content than the US is in charge - look forward to way more censorship.
Reddit, and by extension Lemmy, have this infatuated vision of how private companies are actually great for customers because whenever somebody asks about Steam the explanation given is that if this were a publicly traded company it would be horrendous but because it’s private everything is perfect and there are rainbows inside their offices.
The truth is EA will be just as aggressively profit driven as it already is, the new owners will try to reduce costs just like always, and IPs that sell more will continue to be prioritized just like before.
Essentially a private company can be owned by a dickhead, or a nice person who’s not all about profitmaxing. A publicly traded company is forced to maximize shareholder value.
Valve as a publicly traded company would quickly become another EA/Microsoft/Whatever, because it’s only the next quarter that matters. Valve under GabeN has been built to bring in large, and yet sustainable profits.
EA’s new owners are going to be the absolute worst. So it’s going to be a worse company than before.
Consider that Erik Prince’s murder-for-hire company is private. So is Xitter now that Melon bought it.
So it’s not that private companies are better, but rather that they have the capacity to be better. And it all depends on the owners.
The reason Steam is less bad is that its president is less of a dick. The reason that works is because he’s not beholden to other shareholders, because he’s the majority owner himself. If they were publicly owned, he wouldn’t have the liberties to make long-term decisions instead of (only) short-term money grabs.
But his decisions most likely aren’t the result of some bleeding heart morality so much as a less shortsighted profit calculation. Newell is still a billionaire, and not just because of the assets Valve owns. He apparently has several ships, which is several more than most people can afford. He also owns a custom yacht manufacturing company, which is also a lot more than most people can afford (both the products and the company). He might not be as all-around awful as other billionaires, but you don’t get this rich through your own work alone.
Private ownership isn’t a guarantor of customer-friendly behaviour. It just eliminates one factor forcing companies to prioritise profits, but it can’t replace customer protection regulations and oversight.
Gabe Newell is basically a benevolent dictator. Valve is proof that private companies have the potential to not completely suck and publicly traded ones basically always seem to suck.
The issue at any scale beyond “local store” is that eventually your customers and transactions become impersonal numbers on a sheet. It’s hard to remember the human on the other side when there’s just too many of them for our brain to actually process as such.
At that point, the drive for profit inherent to our system and essential for subsistence can’t be checked by intuitive empathy alone any more. It requires conscious effort, diligent reflection and the will to be customer-friendly.
When the least scrupulous end up having the most money and owning majorities of private companies, it’s hardly any wonder most of them suck.
Well, I can probably afford a small RC boat or something. Not quite the same caliber that could carry humans on the ocean, but more than nothing I guess.
Dangit, now I want to look up how much a model yacht would cost and if I could afford to brag “I’ve got a small fleet of yachts”…
Public companies have a hard wired compulsion to increase value for shareholders. Every single decision is made with profit in mind. In the best cases you get milquetoast, inoffensive material everyone can enjoy. Ultimately, this leads to a relentless and aggressive pursuit of endless growth at any cost.
Private companies can take a loss here and there, they don’t have to report a bad quarter and so they can plan ahead. Which allows them to do two, non explains things. That approach allows them to build a robust and loyal consumer base which is quite valuable. So they’ll sell it off again and let the public companies milk them dry. They can also get up to some horrendously evil shit behind closed doors in a foreign country where the laws only apply to people who aren’t the ruling family and never have to answer for it. Though that kind of thing is usually reserved for like, chemical manufacturers and labor intensive luxury food markets. It may be that the Saudis are just diversifying and want a propaganda mouthpiece. Or one of the royals REALLY likes FIFA.
If it’s gone public, then generally going private is a bad thing. It’s usually some investors that are going to do something bad with the company.
A company that starts and stays private may be all the better for it (but that’s hardly assured either). If they are a success and didn’t bring a lot of investors, then it generally means they actually care about the work intrinsically.
Is this better or worse than being a public company?
Depends. This is a leveraged buyout and there are countless examples of other companies bought like this and they don’t last long.
They take on massive debt to buy it. Then they shift that debt to the company they bought and away from the individuals. Then that company is crippled paying down interest so they can’t innovate (not that EA did), then they’ll have to cut costs and the product will diminish. Likely pay out billions in dividends to the buyers can make profit and in 5-10 years EA will go bust or get sold again.
The banks will be left holding the bag, but probably covered their loses by that time so can write off the rest of the debt.
This specific instance? Worse.
It’s being bought by blood money (Kushner’s $2billion investment/bribe to hush up the US government about the brutal murder of a US resident journalist at the hands of the Saudis). Plus a country that somehow is even more squeamish about content than the US is in charge - look forward to way more censorship.
Reddit, and by extension Lemmy, have this infatuated vision of how private companies are actually great for customers because whenever somebody asks about Steam the explanation given is that if this were a publicly traded company it would be horrendous but because it’s private everything is perfect and there are rainbows inside their offices.
The truth is EA will be just as aggressively profit driven as it already is, the new owners will try to reduce costs just like always, and IPs that sell more will continue to be prioritized just like before.
Essentially a private company can be owned by a dickhead, or a nice person who’s not all about profitmaxing. A publicly traded company is forced to maximize shareholder value.
Valve as a publicly traded company would quickly become another EA/Microsoft/Whatever, because it’s only the next quarter that matters. Valve under GabeN has been built to bring in large, and yet sustainable profits.
EA’s new owners are going to be the absolute worst. So it’s going to be a worse company than before.
Consider that Erik Prince’s murder-for-hire company is private. So is Xitter now that Melon bought it.
So it’s not that private companies are better, but rather that they have the capacity to be better. And it all depends on the owners.
The reason Steam is less bad is that its president is less of a dick. The reason that works is because he’s not beholden to other shareholders, because he’s the majority owner himself. If they were publicly owned, he wouldn’t have the liberties to make long-term decisions instead of (only) short-term money grabs.
But his decisions most likely aren’t the result of some bleeding heart morality so much as a less shortsighted profit calculation. Newell is still a billionaire, and not just because of the assets Valve owns. He apparently has several ships, which is several more than most people can afford. He also owns a custom yacht manufacturing company, which is also a lot more than most people can afford (both the products and the company). He might not be as all-around awful as other billionaires, but you don’t get this rich through your own work alone.
Private ownership isn’t a guarantor of customer-friendly behaviour. It just eliminates one factor forcing companies to prioritise profits, but it can’t replace customer protection regulations and oversight.
Gabe Newell is basically a benevolent dictator. Valve is proof that private companies have the potential to not completely suck and publicly traded ones basically always seem to suck.
Its just that usually private ones suck as well.
The issue at any scale beyond “local store” is that eventually your customers and transactions become impersonal numbers on a sheet. It’s hard to remember the human on the other side when there’s just too many of them for our brain to actually process as such.
At that point, the drive for profit inherent to our system and essential for subsistence can’t be checked by intuitive empathy alone any more. It requires conscious effort, diligent reflection and the will to be customer-friendly.
When the least scrupulous end up having the most money and owning majorities of private companies, it’s hardly any wonder most of them suck.
That number for the rest of us being, of course, none.
Well, I can probably afford a small RC boat or something. Not quite the same caliber that could carry humans on the ocean, but more than nothing I guess.
Dangit, now I want to look up how much a model yacht would cost and if I could afford to brag “I’ve got a small fleet of yachts”…
Depends on your perspective.
This is bad from a business, creativity, and human rights standpoint.
However, it’s good that a shitty company like EA with predatory products is going to be even more exploitative and predatory from here on out.
I enjoy watching the useful idiots get taken for a ride.
Haven’t bought an EA game in over a decade. Don’t intend to change that anytime soon.
Public companies have a hard wired compulsion to increase value for shareholders. Every single decision is made with profit in mind. In the best cases you get milquetoast, inoffensive material everyone can enjoy. Ultimately, this leads to a relentless and aggressive pursuit of endless growth at any cost.
Private companies can take a loss here and there, they don’t have to report a bad quarter and so they can plan ahead. Which allows them to do two, non explains things. That approach allows them to build a robust and loyal consumer base which is quite valuable. So they’ll sell it off again and let the public companies milk them dry. They can also get up to some horrendously evil shit behind closed doors in a foreign country where the laws only apply to people who aren’t the ruling family and never have to answer for it. Though that kind of thing is usually reserved for like, chemical manufacturers and labor intensive luxury food markets. It may be that the Saudis are just diversifying and want a propaganda mouthpiece. Or one of the royals REALLY likes FIFA.
Hard to say.
Yes.
If it’s gone public, then generally going private is a bad thing. It’s usually some investors that are going to do something bad with the company.
A company that starts and stays private may be all the better for it (but that’s hardly assured either). If they are a success and didn’t bring a lot of investors, then it generally means they actually care about the work intrinsically.