They probably saw not buying them as no threat to them actually leaving. They dont have to spend any more money on them (because they did make them loose a lot of money) but they can still make games for cube. I dont think they would imagine that a company they had not even competed with yet, would buy Rare from them. In the end its biz, and MS was the devil and offered offer so (too) much money they could resist.
The devil will do that, so Ive heard...
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