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Microsoft Roundup: Xbox As A Service, OneDrive, Hungary, Russia

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Microsoft (MSFT - Free Report) has launched a subscription service for Xbox and announced OneDrive tools for video files, while dealing with bribery charges in Hungary and reporting fresh Russia security hacks.

Xbox Subscription Service

Microsoft has launched a subscription service called Xbox All-Access that includes the company’s Xbox Live Gold subscription (offering exclusive content, including two freely downloadable games every month) and Game Pass (offering access to 100+ games) along with the cost of an Xbox One S (starting at $22 a month) or Xbox One X (starting at $35 a month). After two years, the device becomes the users, who can also then decide on whether to continue with the online services or not. Not too different from the way Apple (AAPL - Free Report) sells its high end phones but not the way game consoles are usually sold.

It allows Microsoft to start an as-a-service model for its gaming business while lowering the cost barrier for those unable or unwilling to pay for an Xbox upfront. While die-hard PS4 fans with their game libraries may not switch to Microsoft, this is actually a viable offer that may entice some to try it. It might also come in handy during the holidays when people are more likely to spend on consoles and games.

For Microsoft, it’s also a chance to catch up with Sony (SNE - Free Report) , which has stolen a huge lead in this product cycle. By the time the model gains momentum, streaming games from the cloud may become commonplace and Microsoft may be able to sell across platforms.      

OneDrive Video Files

Microsoft is doing more to make video files more useful for work. So the company is providing automated, time-stamped, searchable transcription services for video-format files in OneDrive. So if you wanted to access some part of it, you could quickly jump to the text in a way that was never possible in a video.

Moreover, searching for the files you want is also getting easier because OneDrive and the Office.com home page will now suggest the files/photos you might be looking for based on your working and usage patterns and who you’re sharing information with and how. All this is being enabled with the company’s artificial intelligence tools.

So if you’re under the impression that it’s only companies like Alphabet (GOOGL - Free Report) and Facebook (FB - Free Report) that’s guzzling your data, you would be wrong. Microsoft is doing it too, only the information gathering is mostly on your work life, so it might hurt less.

Bribery Charge In Hungary

Microsoft is being investigated in Hungary for purported corporate bribery and corruption overseas under the U.S. Foreign Corrupt Practices Act. The deals to sell Word and Excel took place in 2013 and 2014, when Microsoft personnel sold the software at steep discounts to middlemen who then sold it to the government at close to their real prices.

The investigation is to determine whether the difference was used to bribe government officials.

Microsoft has said that it tries to run a clean business, that it took prompt action upon discovery of the irregularity in 2014 and that it had even fired four employees as a result, including its country manager, Istvan Papp. Last year, it also terminated business relationships with four partners in Hungary.

In 2013, similar deals also probably took place in five other countries, i.e. China, Romania, Italy, Russia and Pakistan but the progress/result of those investigations are unknown according to the WSJ.

Calling Out Russian Hacking

In an attempt to get close to the government, which has been cracking down on the anticompetitive and anti-privacy actions of technology companies, Microsoft has claimed in a court filing that it used a court order to shut down six fake websites created as part of a phishing attack on the U.S. Senate and two conservative think tanks, the Hudson Institute and the International Republican Institute.

Microsoft’s Digital Crimes Unit (DCU), which discovered the irregularity, believes the attacks are related to a Russian intelligence group that has gone by the names of Strontium, Fancy Bear and APT2812. Moreover, it has taken this action 12 times in two years to shut down 84 fake websites associated with this group.

Thomas Rid, a cybersecurity expert at the Johns Hopkins School of Advanced International Studies thinks that these kinds of attacks aren’t particularly extraordinary. Government officials of most countries are generally subject to certain amount of espionage. But Microsoft president and chief legal officer Brad Smith sounded far more dramatic, calling it a threat to democracy.

“Broadening cyber threats to both U.S. political parties make clear that the tech sector will need to do more to help protect the democratic process,” Smith said.

Recommendation

Microsoft shares carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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