The CEO called customers idiots and the huge merger ran into unexpected difficulty

The decision of Iron Source Sign the merger deal with the game development giant Unity Does not pass quietly. The main reason is the past of Iron Source. The company is known today mainly for its solutions for implementing advertisements in mobile games, but in the previous decade the company’s most lucrative product was InstallCore, a tool for installing software for home computers. ManuIt has been widely criticized over the years and has been accused of implanting various malicious computers in computers, such as software that automatically pops up advertisements. Instolcore has also been classified by Microsoft and various security companies as a malicious tool that infiltrates files and changes settings on users’ computers.

■ “Also merges to create hope for employees”: Iron Source has little choice but to merge
■ Iron Source merges at a value about 60% lower than when it entered Wall Street last year

Although this regulatory tool was discontinued by Iron Source in 2020, as revealed in a Globes investigation last year, it is now the focus of opposition to the large merger deal between Unity game development company and the Israeli company, announced last week – a $ 4 billion share purchase deal. .

The opposition comes from independent game developers, the customers of the Unity game development engine, who oppose the Iron Source merger, which they call a “damage distributor”. Some of those developers, including key figures in the gaming industry, have announced that they intend to abandon Unity and move on to developing games on competing platforms.

The US-based tech site Protocol defined it this week as “the biggest public relations crisis Unity has faced.” Even if there is a slim chance that this rebellion of independent developers will result in the cancellation of the merger, which should be finalized in the fourth quarter of this year – it is still an affair that erodes trust in the Unity brand that last year served 61% of game developers worldwide.

Since the announcement of the merger, Unity shares have fallen by 13%. This decline also has implications for Iron Source and its shareholders who are expected to hold 26.5% of the merged company upon completion of the transaction.
On the day the merger was reported, the deal reflected a value of $ 4.4 billion for Iron Source, a 74% premium to the average price of Iron Source stock in the 30 days prior. Following the drop in Unity shares, the deal for Iron Source now reflects a value of only $ 4 billion.

Iron Source entered the New York Stock Exchange a year ago as part of a $ 11.1 billion Spock merger, but has since collapsed as part of the overall fall in technology stocks, and as of the announcement the merger was worth $ 2.3 billion.

Criticism: “Mixing with Evil Villains”

It didn’t take long for the game developers to come up with Iron Sources’ past. On the day the deal was announced, a Danish game developer named Andrea Gaita tweeted: “Wait a minute, let me see if I understood correctly, is Unity merging with a company that is mainly known for its damage distribution system?”, Gaita wrote in a tweet that garnered 15.5 thousand likes. “Manufacturers of mobile devices, Apple for example, need to trust the engine (like Unity – ED) and be sure that it does not attach bad things to the game. So now Unity is merging with a company that specializes in attaching damages. ”

Rami Ismail, a well-publicized game developer who also comes from Denmark, tweeted to his 200,000 followers following the deal that “you would think all Unity has to do is maintain goodwill, continue to improve its engine and not mix with evil villains.”

Unity responded to claims that have been extensively reviewed in recent days on gaming sites around the world, saying that the PC activity, the one in which Instolcore was developed and operated, was split from Iron Source “several years ago” and today the company focuses on game and app developers. Unity further claimed that Iron Source “suffered from bad players who tried to exploit it”.

In practice, the personal computer activity in question became Rise, which is also owned by the shareholders of Iron Source. Rise was split with 150 employees just at the end of 2020, just months before Iron Source announced the merger of Spock in March 2021. So Iron Source explained this split in separating non-core activities.

Dismisses workers and closes mergers in billions

Iron Source’s past as a software installer has become a major source of resistance for game developers, but it’s not the only issue. Unity has emerged as a convenient and user-friendly tool for independent game developers and has created their own community environment. But for many of those developers the merger with Iron Source was seen as representing a wrong direction that the company and CEO John Riccito are following.

The merger with Iron Source should strengthen Unity’s tools for monetizing games and the ability to make money from them, for itself and for the developers. But for the perception of part of the community, Unity had to focus instead on developing its engine and technology, i.e. concentrating on art rather than business. Lotte May, part of the development team of an independent gaming studio called necrosoft and a gaming commentator, said in an interview with Game Developer that Unity is a corporation that is just chasing growth and wants to be the next Unicorn in Silicon Valley and will kill itself on the way there. It’s a lot and it’s coming to a breaking point with the community. ”

Another criticism refers to the fact that only last month, just before the deal, it was learned that Unity was laying off 4% of its workforce. “Unity lays off hundreds of employees and then closes a multi-million deal to merge with a company that distributes damages. I have not seen such corporate suicide in a long time,” tweeted Canadian YouTuber Muthar Anas, who specializes in gaming and technology.

CEO: Responders? “Fucking Idiots”

The image crisis might not have been so inflated if Unity CEO had not decided to be interviewed by and comment on some of the allegations against the deal.

However, Richitello’s most problematic answer came when asked about Unity’s focus on advertising and the company’s desire to offer constant feedback to developers on how they can earn more from their users. Richitello has compared developers who oppose this to classic carmakers like Ferrari, who insist on continuing to use outdated manufacturing methods. “There’s a small part of the gaming industry that works this way, and these are the people I like to argue with the most in the world. They’re brilliant and pure people but they’re also some of the biggest fucking idiots.”

The phrase was not well received and in light of the noise caused by the answer, Riccello initially claimed that it was a “clickbait” article that took things out of context. After that did not help, he posted on Twitter a long apology for his rude words choice. It’s just that the damage, at least in terms of image, has already been done.
Iron Source did not respond to a request for comment.

By Editor

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