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Squilliam said:
Actually there are two good targets for aquisition. Valve and Epic. Epic makes engines for a lot of games and they have a strong relationship with Microsoft and Valve has the biggest online game distribution site under their belt as well.

I doubt they would buy Epic because they make a lot of money with the unreal engine and MS would most likely make that engine exclusive to MS, then developers would have to license a different engine if they wanted to put a game on the ps3. I see them spending the money mostly on start-up companies because they could be the most profitable if they explode like twitter, youtube, ect...