The Federal Trade Commission and Microsoft are fighting in court over whether the Xbox developer's acquisition of one of the biggest game developers in the world will create a monopoly.
The two sides have been in court since June 22 to resolve the federal agency's injunction blocking Microsoft's attempt to acquire the gaming company over alleged antitrust breaches. The FTC is attempting to kill the planned merger, alleging that it would harm competition in the console gaming market. A multitude of email communications and CEO statements have been unearthed in the trial and offer insight into the gaming industry.
Here are the top revelations from the Microsoft-FTC trial.
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Sony's leadership sent mixed messages over Microsoft merger
Sony, the creator of PlayStation, has been a focus for Microsoft in the legal battle over this merger. The FTC has voiced worries that Microsoft, the creator of Xbox, would make Call of Duty, one of Activision Blizzard's most popular games, an exclusive. This would theoretically cost Sony tens of millions of dollars in sales. However, Sony's executives do not appear to be concerned.
PlayStation CEO Jim Ryan initially stated in an email to former CEO Chris Deering that he was not worried. "It is not an exclusivity play at all," Ryan argued. "[Microsoft is] thinking bigger than that, and they have the cash to make moves like this." The CEO said that he had talked to Activision Blizzard CEO Bobby Kotick, Xbox CEO Phil Spencer, and Microsoft CEO Satya Nadella and received assurances from all three that Microsoft intended to keep Call of Duty on PlayStation.
Ryan later stated during his deposition that "Microsoft intends to use Call of Duty to disadvantage PlayStation in terms of the availability" and to drive consumers to sign up for Xbox Game Pass. Microsoft accused Ryan of changing his view and running to regulators in order to avoid competition.
Microsoft's shopping list
Activision Blizzard was not the only company on Microsoft's radar, according to a list of 100 game companies considered for purchase that was revealed in the court proceedings. Microsoft also considered acquiring Sonic the Hedgehog developer Sega and Destiny 2 developer Bungie, two acquisitions that could have given Microsoft significant control over popular gaming intellectual property. The review of potential acquisitions, which occurred in 2020, aimed to "spend Sony out of business," according to Microsoft.
The review of companies represented "industry trends we never pursued," a Microsoft spokesperson told the Verge, and had nothing to do with the Activision Blizzard acquisition.
An end to exclusives?
Microsoft CEO Satya Nadella stated during an appearance on Wednesday that he would "love" to get rid of console exclusives, a common practice among game developers to get users to buy one console over another. Nadella said that PlayStation established the practice. He also said the company aims to embrace cloud gaming, a prospect that led to the U.K.-based Competition and Markets Authority blocking Microsoft's deal in April, on the grounds that Microsoft would have a monopoly on cloud gaming.
Nintendo's unclear role
Both the FTC and Microsoft fixated on Nintendo and its Switch console. The FTC was adamant in claiming that Xbox only competed with PlayStation in the console gaming market. It also attempted to dismiss claims that Nintendo played a significant role in the console gaming market due to its differing strength in hardware and the way it approached gaming. Microsoft contested this, stating that Nintendo's presence in the market made it a prominent competitor, and claimed that Xbox was behind PlayStation and Nintendo in player numbers.
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Sony's Sharpiegate
PlayStation attempted to redact information from relevant records presented to the court but used a Sharpie to do so, which didn't hide all the details. Several people used digital tricks to read the redacted information, which offered several insights into Sony's current finances. For example, Call of Duty accounted for over $800 million in revenue for PlayStation in 2021 and possibly $1.5 million worldwide. It also revealed that 1 million PlayStation owners only use their consoles to play Call of Duty.