In a surprising turn of events, an email unsealed during the ongoing Federal Trade Commission (FTC) v. Microsoft trial has revealed that Sony’s PlayStation chief, Jim Ryan, did not believe Microsoft’s proposed acquisition of Activision Blizzard was about creating Xbox exclusives.
During the FTC hearing on June 22, 2023, an email exchange between Ryan and a former Sony CEO became public, with the PlayStation chief stating, “It is not an exclusivity play at all. They’re thinking bigger than that and they have the cash to make moves like this.” Ryan also mentioned his interactions with Phil Spencer and Bobby Kotick, reassuring, “I’m pretty sure we will continue to see Call of Duty on PlayStation for years to come.”
This statement starkly contradicts Sony’s stance and filings with regulators, where it has expressed fears that Microsoft could potentially make popular titles like Call of Duty exclusive to Xbox or sabotage PlayStation versions of the game.
Despite expressing his preference for the deal not to occur, Ryan appeared confident about Sony’s future, saying, “We have some good stuff cooking. I’m not complacent, I’d rather this didn’t happen, but we’ll be OK, we’ll be more than OK.”
Negotiations over the Call of Duty franchise have been ongoing, with Microsoft offering to keep the game on PlayStation for three years after the current Activision and Sony agreement ends. Ryan dismissed this offer as “inadequate on many levels”. A 10-year deal has since been proposed by Microsoft, but Sony is yet to sign.
These revelations occur in the midst of regulatory scrutiny over the proposed acquisition. In the UK, the Competition and Markets Authority (CMA) initially raised concerns over Call of Duty exclusivity before shifting focus to cloud market competition and eventually blocking the deal. Similarly, the European Commission dismissed concerns over game exclusivity.
In contrast, the FTC’s case heavily concentrates on the potential harm to console, cloud gaming, and multi-game subscriptions should Microsoft convert Activision games into Xbox exclusives. As part of its defense, Microsoft has argued that it is in third place in console sales and needs the merger to remain a viable competitor in the market.
Background
The court proceedings are part of Microsoft’s ongoing struggle to acquire Activision Blizzard, a deal worth approximately $69 billion. Microsoft has recently claimed in court documents that it has “lost the console wars” to competitors Sony and Nintendo, with Xbox sales consistently ranking third in the market.
The FTC is seeking a preliminary injunction to halt the acquisition until an evidentiary hearing in August. Should the injunction pass, it could force a renegotiation of the merger.
The FTC v. Microsoft trial continues, with further updates expected on the progression of the historic proposed merger.
