This Is Why EA Is Going Private - DTNS 5114  ## Metadata - Author: [[Daily Tech News Show]] - Full Title: This Is Why EA Is Going Private - DTNS 5114 - Category: #podcasts - URL: https://share.snipd.com/episode/0d484f9e-db53-4299-979b-f199f6094a83 ## Document Notes ## Highlights - **EA Taken Private With Big Investors** - EA agreed to a $55B leveraged buyout led by Silver Lake, PIF, and Affinity Partners, keeping CEO Andrew Wilson onboard. - The deal targets closing in Q1 2027 after regulatory review and heavy financing including $20B from JPMorgan. Transcript: Robb Dunewood Listen, Rob, Jason got to go to Ireland to cover a bunch of startups and he's going to come back tomorrow and talk about it. So we'll have to keep our jealousy under control. But the big story today is that Electronic Arts announced that a partnership of Silver Lake, Saudi Arabia's public investment fund, and Affinity Partners will pay $55 billion for A leveraged buyout, taking the gaming company private. EA CEO Andrew Wilson is expected to stay on after the sale. And that sale is not going to happen anytime soon. We'll get to that in a second. PIF, the Saudi Arabian investment fund, already had a 9.9% stake in EA. So that's part of this. And PIF has been expanding its gaming stakes lately. It's got stakes in Nintendo, minority stakes, but significant ones. Take-Two, Activision Blizzard. Yeah, Microsoft owns most of it, but PIF has a little chunk. Capcom, Nexon, Koei Tecmo made big news when Scopely, which is owned by PIF, bought Pokemon Go. Scopely also operates Monopoly Go. So that's one of the owners here. Silver Lake, long time Silicon Valley investment fund, helped Dell go private in 2013. Its name has been associated with the TikTok acquisition that might happen soon. That's the other one. And then Affinity Partner is Jared Kushner's company. He's the CEO. If for some reason you don't recognize his name, he's married to the president's daughter. And Affinity Partners has mostly invested in Israeli startups over the course of its lifetime. But lately, it's been getting into bigger things. This would be the biggest thing it's been involved in yet. EA has not grown as fast as investors think it could, but it is far from a struggling business. Brought in $7.5 billion in revenue in the 2025 fiscal year, has Madden, has what used to be FIFA, now called EA Sports FC. And everybody thinks it's going to have a really good success in Battlefield 6, which is scheduled for release on October 10th. And it makes a bunch of iconic franchises. So it's got a good back catalog, The Sims, Dragon Age, Plants vs. Zombies. Last year, EA made four of the top 10 best-selling games of the year. So the deal is that EA sees that it may be topping out. It's having a hard time seeing if it can keep the hits coming. Like Battlefield 6 is going to run into Grand Theft Auto and some other stuff. So maybe it won't be able to sustain it. So these three companies are offering an estimated 25% premium over the stock market valuation at the time of this announcement. A lot of folks are like, man, maybe they should wait till Battlefield 6 comes out and the stock price is up, but they're getting a 25% premium. So maybe it's an offer they can't refuse. It would make it the largest leveraged buyout ever. A leveraged buyout just means that a significant portion of it is borrowed. JPMorgan Chase is lending $20 billion for this acquisition. And after a regulatory review happens, the deal is expected to close in early 2027, Q1 2027. ([Time 0:03:01](https://share.snipd.com/snip/4aad0204-09f5-4390-9f60-9055eea5a9d7)) - **Private Buyers May Break Up EA** - Leveraged buyouts typically extract value quickly and may sell valuable franchises to repay debt. - Tom and Robb expect EA could be broken into parts and sold off over several years after the deal closes. Transcript: Tom Merritt Well, it's not going to affect the games that we play at all this year and probably at least for the first three quarters of 2026. However, if we can assume that a leverage buyout of this size abides by the same physics and rules that other leverage buyouts abide by, a lot of stuff's going to get sold in late, late, Late 2026, early 2027, and definitely once this thing goes through. Why do I say that? Because that's just what these things do. That's just how they operate. The goal is let's get as much money as we can right now and then sell the really, really, really cool things for parts and continue to see how much money we can ultimately get. If that is the case, though, that is a big deal for EA. EA is one of the biggest names in gaming. So to see it potentially get sold off, like I said, I don't know that that's going to be the case. But that's generally what happens when you see leveraged buyouts. It's like they extract the value out of what they've bought as quickly as they possibly can to get the return on their value because this money is owed. Yeah. Robb Dunewood These are big names. So PIF doesn't generally do the fixer-upper strategy that you're talking to. Silver Lake might, but that's not what it's known for. Neither is Affinity for that matter. But it is a leveraged buyout, right? And if it walks like a duck and clacks like a duck, it might be a duck. So I feel like it's more than just, you know, private equity firm comes in, buys failing publisher, you know, squeezes all the money out of it, it can't, lays everybody off and gets it Efficient and then turns it around and sells it off for parts. It's not going to be exactly like that. I do think you're right that if everybody was coming to EA and saying, I'm sorry, it's too much to swallow at once, the strategy might be for these companies to say, well, let's make it So that it's not too much to swallow at once or divide things up in a way that makes it easier to sell. And when you're public, you can do that, but you have to convince all your shareholders. You have to convince your board. And that's a lot harder. If Silver Lake, PIF and Affinity are coming in with that as their idea, they're already convinced and they don't have to report to shareholders because they're taking it private. Yeah. Tom Merritt The other thing that you have to think about as well is that even if someone wanted to buy this at the premium that they're getting right now, if they, we can do that, but is the government Going to allow us to? Because there's only a few companies that could spend this kind of money on this. And they are named Sony. They are named Microsoft. They are big, ginormous companies that have to go through enormous amounts they're taking it private. Of regulation. And even though, you know, once this becomes a private equity deal, those type of companies will still have to jump through a few hoops. They won't have to jump through all the hoops. They'll just have to jump through a few because of how big they are and how much they want to spend on a private thing that they might purchase. It's not all the regulatory stuff that they would have to go through while these companies are public. So like I said, I hate to see this for an EA, but like I said, if the physics work the same, you will see, say, hey, who wants to buy Madden? Who wants to buy 2K? Who wants to buy, you know, Plants vs. Zombies? Those things are generally the things that, because they are so valuable, hey, I'll take Plants vs. Zombies, you know, Plants vs. Zombies. I'll take, you know, I'll take Madden. I'll take these. And I think you will see ultimately in 2027 and further on, you'll see a breakup of this company. ([Time 0:06:41](https://share.snipd.com/snip/5fb15c7e-e001-4bb8-a23f-876bac02c4a3)) - **Privatization Eases Strategic Sales** - Taking EA private makes strategic restructuring easier because new owners don't need to convince public shareholders. - That could let buyers repackage and sell franchises incrementally to avoid regulatory hurdles. Transcript: Tom Merritt The other thing that you have to think about as well is that even if someone wanted to buy this at the premium that they're getting right now, if they, we can do that, but is the government Going to allow us to? Because there's only a few companies that could spend this kind of money on this. And they are named Sony. They are named Microsoft. They are big, ginormous companies that have to go through enormous amounts they're taking it private. Of regulation. And even though, you know, once this becomes a private equity deal, those type of companies will still have to jump through a few hoops. They won't have to jump through all the hoops. They'll just have to jump through a few because of how big they are and how much they want to spend on a private thing that they might purchase. It's not all the regulatory stuff that they would have to go through while these companies are public. So like I said, I hate to see this for an EA, but like I said, if the physics work the same, you will see, say, hey, who wants to buy Madden? Who wants to buy 2K? Who wants to buy, you know, Plants vs. Zombies? Those things are generally the things that, because they are so valuable, hey, I'll take Plants vs. Zombies, you know, Plants vs. Zombies. I'll take, you know, I'll take Madden. I'll take these. And I think you will see ultimately in 2027 and further on, you'll see a breakup of this company. Robb Dunewood Yeah, I wouldn't be shocked. I mean, you've laid out a pretty compelling case and it feels like it's the kind of case you might see on a presentation in a boardroom at EA when they're discussing all this sort of thing. It all tracks for me. Obviously, it's not going to happen until after the deal closes. So they have to close the deal. Then they have to make the changes. So we're talking, you know, maybe five years from now before this sort of thing happens. But I hadn't even thought about just how much trouble Microsoft had to go through to get Activision Blizzard. And so Sony's like, well, we're not going to go through that trouble for EA. But a little less trouble for a little smaller bite? Sure. Yeah. They'll take Madden or, or something right now. That makes sense to me. Tom Merritt You can even see a company like Soutan say, I'll take this now and then come back a year later. You know what? That's still there. We'll, we'll take that now too, because that gets them around the regulatory issues because this is private equity. ([Time 0:09:03](https://share.snipd.com/snip/84a3e613-56eb-423c-ad9e-a148093f4457)) - **Privatization Lowers Acquisition Friction** - Large buyers like Sony, Microsoft, Apple considered EA but found it too expensive publicly. - Privatization may let big firms acquire specific franchises with fewer regulatory headaches. Transcript: Tom Merritt The other thing that you have to think about as well is that even if someone wanted to buy this at the premium that they're getting right now, if they, we can do that, but is the government Going to allow us to? Because there's only a few companies that could spend this kind of money on this. And they are named Sony. They are named Microsoft. They are big, ginormous companies that have to go through enormous amounts they're taking it private. Of regulation. And even though, you know, once this becomes a private equity deal, those type of companies will still have to jump through a few hoops. They won't have to jump through all the hoops. They'll just have to jump through a few because of how big they are and how much they want to spend on a private thing that they might purchase. It's not all the regulatory stuff that they would have to go through while these companies are public. So like I said, I hate to see this for an EA, but like I said, if the physics work the same, you will see, say, hey, who wants to buy Madden? Who wants to buy 2K? Who wants to buy, you know, Plants vs. Zombies? Those things are generally the things that, because they are so valuable, hey, I'll take Plants vs. Zombies, you know, Plants vs. Zombies. I'll take, you know, I'll take Madden. I'll take these. And I think you will see ultimately in 2027 and further on, you'll see a breakup of this company. Robb Dunewood Yeah, I wouldn't be shocked. I mean, you've laid out a pretty compelling case and it feels like it's the kind of case you might see on a presentation in a boardroom at EA when they're discussing all this sort of thing. It all tracks for me. Obviously, it's not going to happen until after the deal closes. So they have to close the deal. Then they have to make the changes. So we're talking, you know, maybe five years from now before this sort of thing happens. But I hadn't even thought about just how much trouble Microsoft had to go through to get Activision Blizzard. And so Sony's like, well, we're not going to go through that trouble for EA. But a little less trouble for a little smaller bite? Sure. Yeah. They'll take Madden or, or something right now. That makes sense to me. ([Time 0:09:03](https://share.snipd.com/snip/4c7ec912-0eb7-49af-ad95-a914952c911f)) - **Use New Parental Controls For Teen Accounts** - OpenAI added parental controls: quiet hours, memory off, voice off, image off, and opt-out of training for teen accounts. - Parents should configure teen accounts and monitor controls because teens may try to circumvent them. Transcript: Robb Dunewood OpenAI officially introduced its parental controls in ChatGPT on Monday. Everybody's been talking about this for a few weeks. And OpenAI kind of telegraphed that this was coming. It's now there. Parents can set quiet hours, turn off memory, turn off voice mode, turn off image generation, opt out of model training. Of course, you have to have the teen on a teen account to do this, but that's true of everything, right? Teen accounts also get a reduced possibility of having graphic content or extreme beauty ideals and a system to recognize potential self-harm. Speaking of, OpenAI is also testing its new safety system for all users, which on a per-message basis routes emotionally sensitive conversations to GPT-5 thinking, which is better Equipped to offer what OpenAI calls safe completion of answers to sensitive questions. So instead of just saying, too sensitive, I'm not going to answer it, it's trained to provide what it considers to be a safe off-ramp to lowering the temperature on those sorts of situations And avoiding unusual, but in some cases, fatal situations. You can argue whether someone was going to take their own life anyway, but there are certainly associations that have happened in the past. OpenAI expanded. It's a $4 a month chat GPT Go plan as well. So that was available in India. It is now available in Indonesia. It basically has limited deep research and no video generation or codex agent. Where do you want to start on this one, Rob? Tom Merritt So I think that OpenAI and companies like OpenAI have done the proverbial stick your finger in your mouth, put it up in the air and see which way the wind is blowing. And they have come to the determination that we better do something about parental control and about making sure that we are trying to make our software as safe for younger users as we Possibly can before the government just comes in and does it in the worst possible way ever. So I think that this is OpenAI and, as I said, other companies as well just trying to get in front of this. So I don't think this is going to be the end of what we've heard about parental controls in these type of tools. I think that everyone is going to get on board with this just because they want to do it in their way as compared to being told, here's how you must do it. Robb Dunewood Yeah. I try to remember that these tools have only been around for a couple of years. And so we are learning as we go where the pitfalls are, what the things are that we need to repair. I'll give OpenAI a C grade on responding to that. I don't know that they're always as proactive as they could be, but they have been pretty good at providing actual solutions in response. And I think this is an example of that. These are good parental controls. What's going to happen next, in my opinion, is that people are going to say, okay, but teens can get around this. We're seeing this with Meta now, what, 20 years after social media launched, where they're finally getting around to like, but you need to stop teens from having accounts. I think that's going to come faster for OpenAI, where someone's going to to say, well, you need to start detecting when a teen is trying to get around these rules. And obviously, like you said, they're going to keep refining these parental controls and learning which ones work and all that sort of thing. The learning curve, I think, is steeper on safe conversations. I don't think anybody really knows what that is. They're doing their best to study it and see what's effective. But these tools are too new for this to be bulletproof. So somebody, you know, is going to fall afoul of this and people are going to point fingers and say you didn't do enough and then they're going to have to refine it. Tom Merritt Yeah, Tom, a point that I've heard you make on multiple occasions about this type of thing, that the goal is not to block all underage users from ever using the platform in any way that They're not supposed to. It's to make it significantly difficult enough so that most of them just won't try to get around it. So are they going to get perfect compliance? No, they're not going to get that. But will it be better than it was before they implemented this? I think the answer is absolutely yes. So once again, OpenAI and other companies like it, they're putting these things in place because it's a good thing to do and they will get relegated and may even still get relegated or Get regulations levied against them if they don't do this. So I think they're just trying to get as far ahead of it as they possibly can for what they know is coming down the pipe. Robb Dunewood Yeah, if you're a parent and you have a teen that you want to use ChatGPT, I'd be curious what you think of these parental controls yourself. ([Time 0:18:12](https://share.snipd.com/snip/d24ced6f-a187-4927-bd86-45671e8538b6)) - **AI Safety Moves Aim To Preempt Regulation** - OpenAI is proactively adding safety features to preempt harsher government regulation. - The company routes sensitive messages to GPT-5 for safer responses instead of blunt refusals. Transcript: Tom Merritt So I think that OpenAI and companies like OpenAI have done the proverbial stick your finger in your mouth, put it up in the air and see which way the wind is blowing. And they have come to the determination that we better do something about parental control and about making sure that we are trying to make our software as safe for younger users as we Possibly can before the government just comes in and does it in the worst possible way ever. So I think that this is OpenAI and, as I said, other companies as well just trying to get in front of this. So I don't think this is going to be the end of what we've heard about parental controls in these type of tools. I think that everyone is going to get on board with this just because they want to do it in their way as compared to being told, here's how you must do it. Robb Dunewood Yeah. I try to remember that these tools have only been around for a couple of years. And so we are learning as we go where the pitfalls are, what the things are that we need to repair. I'll give OpenAI a C grade on responding to that. I don't know that they're always as proactive as they could be, but they have been pretty good at providing actual solutions in response. And I think this is an example of that. These are good parental controls. What's going to happen next, in my opinion, is that people are going to say, okay, but teens can get around this. We're seeing this with Meta now, what, 20 years after social media launched, where they're finally getting around to like, but you need to stop teens from having accounts. I think that's going to come faster for OpenAI, where someone's going to to say, well, you need to start detecting when a teen is trying to get around these rules. And obviously, like you said, they're going to keep refining these parental controls and learning which ones work and all that sort of thing. The learning curve, I think, is steeper on safe conversations. I don't think anybody really knows what that is. They're doing their best to study it and see what's effective. But these tools are too new for this to be bulletproof. So somebody, you know, is going to fall afoul of this and people are going to point fingers and say you didn't do enough and then they're going to have to refine it. Tom Merritt Yeah, Tom, a point that I've heard you make on multiple occasions about this type of thing, that the goal is not to block all underage users from ever using the platform in any way that They're not supposed to. It's to make it significantly difficult enough so that most of them just won't try to get around it. So are they going to get perfect compliance? No, they're not going to get that. But will it be better than it was before they implemented this? I think the answer is absolutely yes. So once again, OpenAI and other companies like it, they're putting these things in place because it's a good thing to do and they will get relegated and may even still get relegated or Get regulations levied against them if they don't do this. ([Time 0:19:44](https://share.snipd.com/snip/9f0ce123-1498-410a-8658-1b87de1af0e4)) - **Qualcomm Closes The Gap With Apple Chips** - Qualcomm's Snapdragon X2 Elite Extreme narrows the performance gap with Apple Silicon, but Apple M4 Max still leads modestly. - The competitive gains make Windows laptops with Qualcomm more viable for many users. Transcript: Robb Dunewood See what you did there. Last week, Qualcomm showed a reference laptop running its Snapdragon X2 Elite Extreme Chip beating Apple Silicon. As expected, benchmarkers have been checking those claims and now note that the Apple M4 Max beats the X2 Elite Extreme by 9.5% on a single-thread Cinebench 2024 test and 2.8% multi-thread. Now, that's enough to give Apple the bragging rights, don't get me wrong, but that's still a big improvement for Qualcomm, putting it arguably on par or close enough to par that if you Like buying a laptop that runs Windows and has Qualcomm, you're not going to be giving up all that much. Meanwhile, Tom's Hardware found that Apple's new A19 chips, those are the ones in the new iPhone 17 line, are the fastest CPUs available. A19 and A19 Pro were almost on par with each other, according to Now, of course, speed is not everything, and the chips don't perform as well on multi-thread benchmarks as they do on single-thread. But still, both A19 and A19 Pro on single-thread beat actively cooled chips like Intel's Core Ultra 9 258K, AMD's Epic 4585px, and even beat Apple's own M3 Ultra in these benchmarks. So you're getting some impressive chips in those phones. Tom Merritt These chips are what we would call fast, fast. They're lightning fast. ([Time 0:25:26](https://share.snipd.com/snip/ef11d6e7-49d1-446e-a94e-76813c195354)) - **Tile Trackers Can Be Spoofed To Frame People** - Researchers found Tile trackers broadcast an unencrypted static MAC plus predictable rotating IDs, enabling spoofing. - That vulnerability could let attackers make a tag appear near someone and falsely suggest stalking. Transcript: Tom Merritt Wired reports that Akshay Kumar, Anna Raymaker and Michael Spector of Georgia Institute of Technology discovered that Tile's tracking tags broadcast an unencrypted static MAC Address alongside his rotating ID. This could be used by a malicious actor to rebroadcast the information to make it appear as if the tag is near someone. In other words, they could frame the Tile owner to look as if they're stalking someone. Security researchers reported the findings to Tile in November, but Tile stopped talking to them in February. Robb Dunewood Yeah, and Tile just told Wired, we've made security improvements. They didn't comment on this specifically. Not having them encrypted, I think, is the biggest problem here. Broadcasting the MAC address isn't great, but if it was encrypted, maybe not as big of a deal. Certainly not as big of a deal as it being unencrypted. Also, this report said the rotating IDs were predictable. They were able to guess what they would be, which is very bad. That's horrible. Yeah. So, and if you didn't quite understand the vulnerability here, basically what I could do is if I have monitored Rob's tile tracker, I can predict the rotating ID his MAC address isn't Going to change. I can then take that information and I can go over to Roger Chang and broadcast Rob's tile tracker info to make Roger's devices think that Rob's tile is near him. And then Roger could then accuse Rob of trying to stalk him or track him or something like that. Not that Rob would ever do that. But, you know, that's the kind of thing that the Georgia Institute of Technology folks were surmising could happen if this wasn't patched. Tom Merritt So kind of ball in Tiles court, right? We don't know because they're not talking, they're not talking about hopefully Tiled has fixed this absolutely to where this is not going to be a problem because this is a big deal. When you, when you start thinking about stalkers and the stuff that they can do, it doesn't sound like it would be terribly difficult to make it look like somebody is someplace where They actually are not. And that, that is very, very problematic. ([Time 0:27:45](https://share.snipd.com/snip/c3d1ce33-427b-4253-80ac-832da5edc69e)) - **Prefer Encrypted Trackers Or Wait For Patches** - Users should demand fixes or avoid vulnerable trackers until manufacturers confirm patches. - Prefer implementations that encrypt rotating IDs like Apple AirTags to reduce spoofing risk. Transcript: Tom Merritt So kind of ball in Tiles court, right? We don't know because they're not talking, they're not talking about hopefully Tiled has fixed this absolutely to where this is not going to be a problem because this is a big deal. When you, when you start thinking about stalkers and the stuff that they can do, it doesn't sound like it would be terribly difficult to make it look like somebody is someplace where They actually are not. And that, that is very, very problematic. Robb Dunewood Yeah. And then, and you know, just as a comparison, I don't know about Google's tags. I didn't see it referenced here and I didn't look it up. But Apple AirTags don't broadcast the Mac address because you don't need to. And they encrypt the rotating ID. And presumably the rotating ID is not easy to guess. But even so, it's encrypted. So those are a more secure implementation. ([Time 0:29:29](https://share.snipd.com/snip/3e2d4ed5-97d5-4cde-b41e-0cb780d715c2)) - **Listeners Praise Deep Dives And Recaps** - Tom and Robb read listener feedback praising special weekend episodes and monthly recaps. - Listeners found the Tylenol deep dive and month-in-review especially useful and well-timed. Transcript: Tom Merritt Get started today. We end every episode of DTNS with some shared wisdom. Today, David and Arturo have some thoughts on this weekend's special episodes. Robb Dunewood Yeah, on Saturday, Jen Kutter and I did a month in review. That's something we're trying out. Might do it every month. And then on Sunday, I had a great conversation with Dr. Jerry Tolbert about Tylenol. Just very nuts and bolts. Here's what we actually know and here's what we don't without getting political. Arturo wrote, I've been in Japan for the month and the monthly recap was particularly well-timed for me. I've been able to listen to some of the weekly daily tech headline recaps and they're somewhat useful to be too, but on weekends, I have less time to listen alone. So this monthly one especially hit the spot. And then David wrote, just listened to The Truth About Tylenol. It was brilliant. I went into it apprehensive, hoping it wasn't going to be political and wondering how it fit into the DTNS remit. All my fears were allayed. Dr. Jerry Tolbert brought clear-headed facts to the table, helping me understand the situation better. Did it truly fit into the DTNS wheelhouse? I'm not completely convinced that it did, but when it's this good, I'm happy to welcome it in. And the same goes for the episodes with Dr. Nicky too. Please keep up the good work. Those are some nice comments. Tom Merritt Folks like the stuff that we're doing at different times, whether it be during the week or on the weekends. Robb Dunewood Yeah, we got really good comments about the Tylenol episode, which I too thought Dr. Jerry Tolbert was fantastic with. And we got positive response to the month in review from people saying, oh, this was great. I feel like I don't have to go back and listen to every episode. I can just, yeah, I'm caught up now and I can start over, which was kind of the idea there too. So heartening to hear that. And I figured we'd read these in case people were like, oh yeah, I haven't got to those episodes now. You've got a better idea of what you're looking at. Tom Merritt Well, folks, we want to know what you're thinking about. So if you've got some insight into a story, share it with us at feedback at dailytechnewsshow.com. Robb Dunewood Yeah, big thanks to David and Arturo for contributing to today's show. Thank you for being along for Daily Tech News Show. ([Time 0:32:50](https://share.snipd.com/snip/fc09b056-3502-4472-84df-4b0644cdf9f5))