FTC. vs Microsoft hearing is going wild

Several alarming details have emerged as the five-day legal dispute between Microsoft and the US Federal Trade Commission continues... Shubh | 29. June 2023

Several alarming details have emerged as the five-day legal dispute between Microsoft and the US Federal Trade Commission continues in a San Francisco court.

Following the US Federal Trade Commission’s (FTC) request to temporarily halt Microsoft’s planned $69 billion acquisition of videogame developer Activision Blizzard, a five-day hearing is currently underway. The hearing, which is one of the most significant trials in Microsoft’s history, started on June 22 in a San Francisco court and will end on June 29.

Although the court case is associated with Xbox’s acquisition of Activision Blizzard, various topics, including Microsoft’s Game Pass concept and the viability of the Nintendo Switch on the market, have come up during the hearing.

Several previously kept-secret information has now come to light as a result of these legal proceedings, including Sony’s reluctance to provide Activision with PlayStation dev kits for upcoming Call of Duty games, Microsoft’s consideration of purchasing gaming behemoth Sega, IO Interactive, Bungie, and many other companies. Here are the complete highlights of the hearing: 

Email shows Sony wasn’t concerned about COD 

A shocking email from PlayStation CEO Jim Ryan to Phil Spencer revealed that Ryan wasn’t truly concerned about Call of Duty exclusivity. In Ryan’s deposition, Microsoft’s attorneys pointed out how Ryan had spoken to Xbox CEO Phil Spencer in January 2022 to ask for assurances on Call of Duty but had not expressed any concerns about the deal. In Ryan’s words, the Activision Blizzard acquisition originally didn’t worry him, but an email Spencer sent in August 2022  set alarm bells ringing.

Phil Spence claims Sony pays third-party developers to keep titles off Xbox’s platform

Head of Microsoft’s gaming division Phil Spence said in a pre-recorded video deposition that PlayStation regularly pays creators to keep games off of Xbox’s platform, including the newly released Final Fantasy XVI. Phil further asserted that Xbox decided to acquire Bethesda after learning that Sony intended to pay for keeping Starfield off of Xbox’s platform.

This is fairly similar to what happened with Deathloop and Ghostwire Tokyo, which were ultimately launched as PS5 system exclusives. In response to the honorable Judge Corley’s request, Phil Spencer affirms under oath that, should Sony permit it, Call of Duty will continue to be available on the PlayStation platform.

PlayStation CEO Jim makes big claims

On the third day of the court proceedings, Jim Ryan, CEO of Sony, gave a taped deposition in which he criticized Xbox Game Pass.  Ryan referred to Game Pass as “value destructive” and claimed that publishers did not like it in the 70-minute prerecorded segment. In addition, Jim said that if Xbox buys Activision, the firm would be unable to discuss details about their impending PS6 console with the creator of Call of Duty.

Activision CEO Bobby Kotick’s testimony:

Bobby Kotick, the CEO of Activision, shared some new information and his thought processes when making judgments about the franchise during his testimony. According to Activision’s CEO, the value of Call of Duty on subscription services like Game Pass is too high and not healthy for the business, hence the company has no plans to add the game to such services.

In addition, Kotick’s testimony disclosed that across mobile, PC, and console platforms, CoD currently has over 100 million monthly active users and 70 million daily active users as a result of MW2’s record-breaking sales for the franchise. Kotick claimed during his testimony that the popularity of the franchise is also in large part due to PlayStation. 

Kotick also confirmed that the series’ earnings for the PlayStation version of Call of Duty are double those for the Xbox. He also affirmed that Diablo IV was a record-breaking launch for Blizzard and that Call of Duty: Modern Warfare II was the highest-grossing entertainment product of 2022 with over $1 billion generated in 10 days.

Why Sony is opposing the merger? 

Microsoft would take ownership of Call of Duty, World of Warcraft, Overwatch, and many other popular titles if the deal goes through. These video games are among the most widely played in the entire world, with millions of users spending billions on subscriptions and in-game purchases.

Microsoft claims that acquiring Activision will enable it to add well-known games to Game Pass, a gaming subscription service that now has over 25 million paying customers. Additionally, the proposed agreement would add Candy Crush to Microsoft’s library, giving the latter access to the lucrative mobile gaming sector. 

Sony, on the other hand, is concerned that it won’t be able to get popular games for its platform if Microsoft buys Activision. Microsoft has been saying it doesn’t want to take the Call of Duty series away from PlayStation for months. Yet Sony keeps pointing to Microsoft’s purchase of ZeniMax, the parent company of Bethesda, as the main reason it doesn’t trust Microsoft on its offer for the Call of Duty franchise.