The Federal Trade Commission, or FTC, is suing tech giant Microsoft, the parent company of Xbox and Bethesda, over its proposed $68.7 billion dollar acquisition of Activision Blizzard to block the deal. The FTC, led by chair Lina Khan, is responsible for maintaining fair competition and protecting the consumer from unfair business practices.
Microsoft's proposed Activision Blizzard acquisition is one of the biggest in the entertainment industry. Such a massive scale merger could shake the entire industry, and FTC argues that it could provide Microsoft with unfair advantages. The deal has been approved in almost all markets, barring the UK, where the CMA has raised questions regarding cloud gaming.
The FTC has taken Microsoft to court, which will ultimately determine the fate of this merger. Considering both are American companies, the United States is the market that will make or break this deal.
Update: Judge Corley has rejected FTC's injunction thereby giving approval for Microsoft's acquisition of Activision Blizzard
FTC vs Microsoft court hearing Day 5: Minecraft revenue, Xbox Series S pricing, Game Pass subscribers to offset CoD exclusivity, and more
Day 5 is the final day of the FTC vs Microsoft court hearing. The closing argument will begin at 2:30 PM PT / 5:30 PM ET, then it'll be up to Judge Corley to either sustain the injunction or dismiss it. Either way, this decision will be the one to make or break the Xbox-Activision merger, and in turn affect the future of the gaming industry. With that being said, let's take a look at what we've heard so far today:
Minecraft brings in massive revenue for Microsoft, but not for Xbox
- Minecraft has the smallest market share on Xbox, with PlayStation being roughly double of Xbox, and Nintendo Switch double of PlayStation or quadruple of Xbox.
- While Mobile and PC numbers aren't compared, they are hinted to be quite big as well.
- Xbox CFO Tim Sturt mentioned: "Minecraft is one of the most profitable, if not the most profitable, IP that we have."
Xbox Series S pricing was affected by the Nintendo Switch
- Xbox CFO Tim Stuart mentioned that Nintendo Switch is a competitor and it affected the price of the Xbox Series S, both priced at $299 USD.
Game Pass will need 2 million subscribers yearly to offset CoD exclusivity
- If Call of Duty was made exclusive to Xbox, the loss of sales from PlayStation will be recoverable by 2 million yearly subscribers to Game Pass.
- For context, Game Pass currently has around 30 million subscribers, and providing Call of Duty Day 1 will significantly drive up that number.
FTC vs Microsoft court hearing Day 4 recap:
FTC vs Microsoft court hearing Day 3 recap: Xbox considering buying Sega, IO Interactive, Bungie, and others
Day 3 of FTC vs Microsoft focused on Xbox considering over multiple developers and publishers for the acquisition back in 2021, as well as Pete Heines and Matt Booty's emails, which FTC used in an attempt to strengthen their argument. Let's take a look at the major announcements.
Xbox considered buying Sega, IO Interactive, and others back in 2021
- Xbox considered buying Sega, and IO Interactive amongst other major developers back in 2021.
- The disclosed email also reveals Phil Spencer reaching out to Amy Hood and Satya Nadella to seek approval for reaching out to Sega Sammy for acquisition.
Xbox's Matt Booty wanted to "go spend Sony out of business"
- In an email by Matt Booty to Microsoft CFO Tim Stuart, he is seen encouraging high-value acquisition in order to "go spend Sony out of business".
- However, this email is from 2019, preceding Activision's acquisition for more than two years.
FTC vs Microsoft court hearing Day 2 recap: Starfield PS5 exclusivity, Phil Spencer's oath to keep Call of Duty on PlayStation, and more
Day 2 of FTC vs Microsoft kicked off with Phil Spencer on the stand; let's look at day 2's deposition's major highlights.
PlayStation pays third-party developers to keep titles off Xbox's platform
- It was revealed that PlayStation routinely pays developers to keep titles such as the recently released Final Fantasy XVI off of Xbox's platform.
Starfield was planned to be PS5 exclusive
- Phil Spencer revealed that Xbox moved ahead with Bethesda's acquisition after it was revealed that Sony was planning to pay to keep Starfield off Xbox's platform.
- This is quite in line with what happened with Deathloop and Ghostwire Tokyo, which ended p being PS5 console exclusive at launch
Minecraft doesn't have a PS5 version because Sony didn't share a Dev kit
- When asked why Minecraft doesn't have a PS5 version, Phil Spencer revealed that PlayStation didn't send a dev kit for its development.
- However, the PS4 version of the game is playable without any issues on the PS5.
- Furthermore, he also mentioned that Minecraft Legends has a PS5 version as by then the team has received a dev kit.
Phil Spencer swears under oath to publish future Call of Duty on PlayStation
- On the honourable Judge Corley's request, Microsoft gaming CEO Phil Spencer swears under oath to publish future Call of Duty on the PlayStation system, if Sony allows them to. (As Sony already said that the next console dev kit won't be shared with Activision)
- Spencer further explains that it won't make sense business-wise to take CoD away from PS5, as a significant section of revenue is from the players on that platform.
- This completely voids Sony's entire argument that Xbox will be making Call of Duty exclusive to Xbox.
FTC vs Microsoft court hearing Day 1 recap: PS6, Indiana Jones exclusivity, and more
The five-day FTC vs Microsoft court hearing kicked off on June 22, 2023. Let's take a look at some of the highlights of Day 1.
Sony won't share PS6 details with Activision
- In a deposition dated early April of this year, Jim Ryan stated that the company wouldn't be able to share details regarding their upcoming console, PS6, with the Call of Duty maker if Xbox acquires Activision, Sony's rival in the console market.
PS6 expected to launch by 2028
- Microsoft expects the next generation of consoles to arrive by 2028. This would roughly put the life expectancy of Gen 9 consoles (PS5 and Xbox Series X|S) around eight years.
Indiana Jones will be exclusive to Xbox
- Pete Hines shared that the upcoming Machine Games title Indiana Jones was originally planned to be released on PlayStation alongside Xbox and PC, but following Bethesda's acquisition, it was renegotiated with Lucasfilm to be exclusive to Xbox and PC.
Sony knew this deal wasn't about exclusivity
- In a 2022 email by Jim Ryan, he admits that the Xbox's acquisition of Activision isn't about exclusivity, and he believes that PlayStation will continue to get Call of Duty.
- This contradicts his earlier campaign, which pioneered the idea of Xbox withholding the series, even after Sony was offered a 10-year deal.
Furthermore, many other details were revealed on Day 1 of the court hearing, including Xbox's Matt Booty once saying "No f-ing way" on putting Xbox games on Nvidia's GeForce Now back in 2019, and more.