The Game-Changing Revelations in the Landmark FTC v Microsoft Case

Microsoft's legal dispute with the FTC reached a significant point when both parties presented their closing arguments in a San Francisco federal court on June 29. As they await the verdict on the FTC's attempt to temporarily block Microsoft's Activision Blizzard acquisition, it is worth examining the major revelations that emerged from the case. These revelations, which were either witness testimonies or confidential documents unsealed by District Judge Jacqueline Scott Corley, mostly focused on Call of Duty. The FTC believes that this flagship franchise of Activision could potentially influence the outcome of the console wars, which Microsoft previously claimed Xbox had lost leading up to the trial.

Call of Duty Bombshells From FTC v. Microsoft Case

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Although the value of Call of Duty to PlayStation was always undeniable, a recently unsealed document revealed the actual financial impact it had on Sony. According to the filing, Sony experienced a $1.5 billion decrease in revenue from Call of Duty sales on PlayStation consoles in 2021 alone, with more than half of that amount coming from U.S. gamers.

Another court exhibit disclosed that Sony's agreement with Activision for Call of Duty only includes one more game and is set to end in late 2023. This information is significant because it was previously stated that the agreement would last until 2024, suggesting that there would be at least two more titles included. Additionally, during the trial, an email exchange between Xbox Head Phil Spencer and SIE CEO Jim Ryan revealed that Microsoft initially proposed a five-year extension to Sony, which Ryan rejected as a temporary solution that overlooks Sony's broader concerns about the deal.

The talks between the two parties broke down shortly after. However, the risk undertaken by Sony seemed to have paid off, as Spencer made a solemn commitment to keep Call of Duty on PlayStation indefinitely ten months later, during the second day of the ongoing trial. Despite this assurance, the FTC expressed skepticism about Microsoft's trustworthiness in acting in good faith. The acquisition of ZeniMax Media in 2021 was cited as evidence of the potential fate awaiting Activision Blizzard's game library if Microsoft were to acquire the Call of Duty maker.

Bethesda Bombshells from FTC v. Microsoft Case

The revelation during the trial revealed that Bethesda's Indiana Jones game was originally planned to be available on multiple platforms before the Xbox acquisition. It was brought to light that Bethesda had more plans related to PlayStation than Xbox before being absorbed by Microsoft.

Spencer admitted that Xbox was worried about losing Starfield to PlayStation due to the imbalance. This concern played a role in the decision to acquire ZeniMax. As a result, Microsoft decided to cancel the PlayStation versions of all upcoming Bethesda games, except those with existing exclusivity agreements with Sony.

However, when Microsoft revealed a different strategy for Activision Blizzard's game library less than a year later, both the FTC and Sony expressed skepticism about their commitment. Even Bethesda had concerns about Microsoft's promise to keep Call of Duty on PlayStation. Pete Hines, the Marketing SVP of Bethesda, approached Spencer for clarification on the significant differences between the two acquisitions.

Console Bombshells from FTC v. Microsoft Case

While addressing a similar question during his testimony at the hearing, Spencer explained that Microsoft decides on platform exclusivity on a case-by-case basis. He emphasized that there is no contradiction between how ZeniMax is managed and the company's plans for Activision Blizzard's portfolio. Furthermore, Spencer hinted at the release timeframe of The Elder Scrolls 6, suggesting that the highly-anticipated RPG will most likely be available for the current or next generation of consoles. Based on his statement, it is projected to be released in "5+ years."

When discussing the tenth generation of consoles, a recent court document released prior to the trial disclosed Microsoft's anticipation for the release of PlayStation 6 and the next Xbox in 2028. Moving forward, in regards to the upcoming hardware, the tech giant informed the FTC that they are certain Sony's Project Q handheld will be priced at under $300 during the lead-up to their courtroom confrontation.

The trial also established Sony's intention to exclude Activision from the PlayStation 6 ecosystem in the event that Microsoft successfully acquires the Call of Duty creator. Jim Ryan conveyed this stance to the FTC, emphasizing that Sony could not afford to share its upcoming hardware with a subsidiary of its strongest competitor. While this position was not unexpected, it brought to light the fact that Activision had previously assisted Sony in the development of PlayStation hardware, although the specific details of their collaboration were omitted from Ryan's statement.

Game and Exclusivity Bombshells from FTC v. Microsoft Case

Meanwhile, during the proceedings, a significant amount of undisclosed information about upcoming games accidentally made its way into public knowledge. This led to the revelation of the existence of DayZ 2 and also indicated that IO's Project Fantasy will be exclusively available on Xbox consoles. Conversely, there is still a possibility that Obsidian's highly anticipated game, The Outer Worlds 2, might still launch on PlayStation, as Microsoft's decision on the RPG's target platforms has not been finalized yet.

Acquisition Bombshells from FTC v. Microsoft Case

: In the midst of the case, Microsoft CEO Satya Nadella expressed his strong aversion towards console exclusivity, stating that he would "love" to completely eradicate it. Nadella emphasized that Microsoft bears the least responsibility for the prevalence of exclusivity, as the company's market share is considerably smaller compared to Sony and Nintendo.

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The Xbox maker argues that acquiring Activision Blizzard will help it catch up with its rivals, particularly in the mobile sector. This strategic decision was not made overnight as Microsoft had previously considered purchasing Sega, Bungie, and several other companies as revealed in a corporate presentation in May 2021. Microsoft ultimately decided that its next significant acquisition should focus on mobile, as this is an area where its own portfolio is lacking. Bohemia Interactive and Square Enix were quickly disregarded as potential targets, but Zynga remained in consideration. During his cross-examination on June 23, Spencer disclosed that Microsoft had attempted to acquire Zynga just months before Take-Two Interactive did so in early 2022. However, Microsoft ultimately decided against the purchase, determining that Zynga did not align with its mobile ambitions.

Microsoft redirected its attention towards Activision Blizzard, the parent company of King, the creator of Candy Crush. The success of ABK's mobile business astounded Microsoft's executives during their thorough investigation into the acquisition. In an email to Xbox Creator Experience Head Sarah Bond, Spencer specifically highlighted that Call of Duty Mobile accounted for a staggering 30% of Activision's $453 million revenue in Q1 2022, leaving him in awe.

Although Sony publicly expressed its concerns about the impact of the deal on Call of Duty's future on PlayStation, private communications that came to light during the trial revealed a contradictory story. Former Sony Computer Entertainment CEO Chris Deering immediately recognized the acquisition as a strategic move in the mobile gaming sector in an email to Jim Ryan. Expanding on this notion, Deering suggested that Microsoft could have secured exclusive rights for the next three Call of Duty games on Xbox for a hefty sum of "maybe £5 billion" ($6.32 billion) if console exclusivity truly mattered to them.

Considering the investment's overall worth, Deering humorously suggested that Microsoft would have been wiser to "unveil a new electric vehicle" instead of acquiring Activision Blizzard. Ryan seemingly shared a similar viewpoint, expressing in his January 2022 response to Deering that PlayStation would thrive, just months before Sony began opposing the Microsoft acquisition.