Microsoft's Mega Deal: Square Enix Acquisition Discussed
Microsoft's FTC hearing uncovers intriguing documents indicating their past deliberation to acquire Square Enix, adding fuel to ongoing rumors about the tech giant's interest in expanding its presence in the gaming industry
During its ongoing hearing with the Federal Trade Commission, Microsoft disclosed that it had deliberated on the idea of acquiring Square Enix, a renowned Japanese video game company. This consideration was part of Microsoft's efforts to strengthen its Xbox business. As Microsoft continues to face significant regulatory scrutiny, particularly from the EU, UK's CMA, and US's FTC, the company has yet to finalize its proposed acquisition of Activision, which was announced over a year ago. Alongside the investigation, the ongoing preliminary hearing has unveiled various undisclosed details about Microsoft and other players in the gaming industry, shedding light on their expansion strategies, including potential acquisitions of different game studios.
According to Axios Gaming's Stephen Totilo, Microsoft considered the acquisition in 2019, but it's unclear how far the discussions progressed. Totilo's screenshots reveal that Xbox's Phil Spencer provided feedback on the proposal, noting the potential benefits of keeping "recently announced and released games" on announced platforms to boost Xbox's first-party revenue. The proposal also mentioned potential conflicts with shipping future titles by Square Enix on Xbox Game Pass on Day 1, which could hinder base game sales.
In addition to Square Enix, Microsoft explored the possibility of acquiring Bungie and Sega, as well as other studios like Supergiant Games, IO Interactive, Zynga, and Niantic. Jim Ryan, the PlayStation Boss, testified during the hearing and referred to Xbox Game Pass as "destructive". He has been vocal in opposing the Xbox-Activision merger from the start and mentioned that if the merger goes ahead, Activision may not receive PlayStation 6 development kits, giving an advantage to its direct competitor.
Bethesda, which is owned by Microsoft, expressed its concern about maintaining its promise to keep Call of Duty available on PlayStation. This has been a major worry for Sony from the very beginning, as they rejected any deals proposed by Microsoft. Phil Spencer, while testifying, also pledged to uphold the availability of Call of Duty on PlayStation, but Microsoft can only fulfill this commitment if the proposed acquisition is granted approval.
