i wouldnt doubt they are The middleware side of Epic is their claim to fame. 

Baloney, Epic is not the second most valuable game development company in the world. Give me some facts to back up this ridiculous claim.

hmmmm, I might have to go get a 360 now... oh, wait. Thats right, I have almost no money.

Epic isn't worth anywhere close to a billion that is what makes this rumor pretty ridiculous. A number between $350-$500 million would have sounded far more reasonable.

This rumor is highly possible, and is indeed quite plausible. This is the kind of move that gives Microsoft leverage on multiple fronts. Which means it is something they are likely to do, or similar to something they have planned for the near future. Buying Epic goes far beyond the console wars. For instance it would have impact on their computer operating systems, their live game services, their robotics software division, and an assortment of media applications. Basically it could easily push them another half a year ahead of the competition in these fields.

I can sense the fear and the hidden agendas in many posts in this thread. Frankly you have every reason to be afraid, or to calm your apprehension with rhetoric. However Microsoft holding the keys to the car is going to hit Sony very hard indeed. Microsoft is a very aggressive company they would gladly take a hundred million dollar annual loss on the game engine if it effectively pushes Sony onto the tracks in front of a train. Slowing PS3 games development could be a crushing blow. Sony doesn't have a year to put out another game engine.

I am uncertain why anybody is down on Microsoft for not purchasing Bioware or Bizarre. I am also uncertain why its a negative that they are letting Bungie go. To me that is one of the remarkable things about Microsoft that it isn't doing things the Sony or Nintendo way. Sony buys half a dozen developers annually. Nintendo has a massive in house studio. Microsoft has just enough in house development to patch holes in their lineup. Rather then strangling their console in a death grip which hurts third party developers.

Am I the only one seeing the irony here. Big bad Microsoft makes room at their table for the little guy to eat. Not just eat but get a big helping. Sony on the other hand is a vulture eating up small developers left and right. Nintendo just makes a pig of itself at the buffet. According to some this is the opposite of reality. I ask you this if Microsoft is so evil why didn't they prey on the developers that sold themselves off to other companies. Why are they letting Bungie out. They don't have to but they are.

Seriously can you have it both ways here. Microsoft's developer buying sprees are pathetic in comparison with Sony. By all means look at the number of developers they buy every year. Meanwhile Microsoft is not being predatory with developers that are making exclusive games, and they are even letting their best development team spin themselves off.

I would say if there was a point here it is this. Microsoft is neither bullying or being any more predatory then their competitors if anything they have a lighter touch in the flow of things.

ROFLOL...how much did Bio and Pandemic just get bought for? WTF do some of you guys get your analysis from?

ssj12, you clearly don't know much about finance so try not to make ridiculous claims.

 The major shareholders in Yahoo are officers and directors of the company. I'm pretty sure they were involved in rejecting the offer in the first place.

I don't think Microsoft will buy Epic. Epic is a privately held company, which means the private owners would have to want to sell out  for a billion dollars. I doubt they want that right now. If they were hurting for cash or just wanted to make a quick mint, they'd probably make more than a billion dollars on an IPO of the company.  (which they'd probably want to wait until the market recovers before doing)

(which isnt to say the company is worth a billion dollars, just that during an ipo, the value of stocks tend to inflate quickly and past all proportion to the value of the company before profit taking brings the price back down to a reasonable price/earnings ratio. of course, the stock has to stay inflated long enough to outlast the lock up period, which is a minimum of 3 months, if the original owners just want to cash out.)

This is just stupid, everyone knows there is no such thing as a Billion Dollars.

 No they don't. MS said, buying Yahoo means to lend money, the first time in company history. 40 billion is money they just don't have. Thats why they only paying cash to some extend, and do a stock exchange for other part on the Yahoo buy out.