At one time, Microsoft (Nasdaq: MSFT) made an attempt to buy Facebook, now known as Meta Platforms (Nasdaq: META). This was during a period of time when Microsoft looked to be in a secular decline due to the slowing growth of its legacy businesses. Of course, Microsoft was unsuccessful in buying Facebook, and Facebook went on to become a trillion-dollar behemoth.
And, Microsoft surprised the skeptics by finding another growth path by turning its software into subscriptions and the explosion in cloud computing, where Azure is now the second-largest cloud provider.
Now, Meta is facing its own struggles as it contends with the rise of TikTok, unpopularity with teens and young adults, and the declining profitability of ad revenue due to changes made by Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG).
And in an interesting turn of events, Meta and Microsoft are partnering on their virtual reality (VR) efforts as the two companies announced a partnership during Mark Zuckerberg's keynote speech at Meta Connect 2022.
Microsoft CEO, Satya Nadella, made a surprise appearance and the duo announced that Microsoft products and content would be available on the Meta Quest 2 and Meta Quest Pro. It is surprising as both companies are also competitors given that Microsoft recently purchased Activision Blizzard for nearly $70 billion.
However, Microsoft seems more focused on bringing its products to all platforms which is similar to its decision to offer Office products for Mac users. It's also interesting to consider the application of VR to Microsoft's more enterprise-focused products like Teams which already has 270 million users.
This means that users of Microsoft Teams with the Meta hardware could give users the option for virtual meetings. Another application is that Windows 365 apps and software will be available through Meta.
In an interview following the announcement, Meta CEO and founder Mark Zuckerberg said: "Overall, I think that this is a very natural partnership where I think our strategic interests are pretty aligned, and a lot of the things that we care the most about like the consumer experiences and the sense of expression and the ability to maybe make the version of yourself that you want to express the most, and then be able to hang out with your friends, those are the things that we care about the most and then we just really want to make sure that we have the best work tools on there."