re: Microsoft: “We can spend Sony out of business…”

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There is not good reason to block the sale of Activision as long as Xbox keeps to their word not to make CoD exclusive

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Seems to fully support Microsoft's statements that they don't think making COD exclusive would be profitable.

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plus, isn't this whole acquisition centered around increasing Game Pass subscribers?

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Console loyalty is so weird

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they were never able to overcome the errors of the messaging of that launch.

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and what product do you think they're going to push with their own app store?

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Why isn’t the PC an alternative to Xbox?Judge Corley wants to know about consumer choice, because you can play a lot of Xbox Series X games on PC.

Judge Corley: What if they have a PC? Why isn’t everybody, particularly in 2023, likely to own a PC? So they don’t have to buy one.

FTC: The gaming PC is a special kind of PC, it’s a run of the mill PC.

Judge Corley: Maybe I’m biased in the world I’m living in... during the pandemic. Nobody did it on a bargain basement PC. Everybody had a $1,000 or $1,500 PC.

Judge Corley: Why wouldn’t being able to play on PC have downward pressure on the Xbox? If you raise [a console] to $1,000?

FTC: For any given market where we assume the price increases fast then... almost anything becomes a substitute.

The FTC says it has seen no evidence that Microsoft is benchmarking the PC against an Xbox. The FTC could easily explain this to Judge Corley that a gaming PC requires a dedicated GPU to play Call of Duty, significantly increasing the price and complexity compared to the PCs people typically have at home or may have purchased during the pandemic.

The FTC could also argue and easily cite data that shows the vast majority of PC sales are laptops, which don’t have the ability to play games like Call of Duty. Instead, they’re going around in circles on basic questions where Judge Corley is trying to understand simple stuff.

It’s almost as if the FTC doesn’t understand the gaming market it’s trying to define.

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Nintendo Switch argument time.I knew the Nintendo Switch would come back to haunt us once again.
Judge Corley: Why is the Xbox Series S priced at $299?

The FTC calls back to Xbox CFO Tim Stuart and the evidence where Microsoft’s Xbox Series S strategy price was to “get an entry level gen 9 system.” He says:

“When they were pricing it [at launch]... they didn’t say let’s try and triangulate with the Switch. Even if your honor there is some substitution on the Xbox Series S... we don’t think it’s enough to defeat the market we’ve put forward.”

Microsoft’s lawyer cuts in and says that Judge Corley “gets it” and that the $299 price shows they compete when a consumer is making a choice in a store like Best Buy.

The FTC then argues that “you can play video games on your phone, you can play a video game on the console,” but that they’re different. FTC once again says Microsoft didn’t look at Switch pricing during launch.

Microsoft’s lawyer fires back that “they both can do the same thing... but they’re also pricing off what’s in the market to look like it’s an alternative.” Microsoft cites Dr. Bailey’s charts that show games like Fortnite, Apex Legends, Rocket League, and other top games are available on both the Nintendo Switch and Xbox.

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Microsoft’s lawyer tries to correct the FTC and makes an Elder Scrolls mistake.If there’s one rule I’ve learned as a journalist it’s never correct someone’s mistake with a mistake of your own.

Microsoft’s lawyer: Could I clarify one issue that council raised with you, when you were asking about Zenimax and asked him to find a game that was most similar to Xbox, he mentioned Elder Scrolls. That is incorrect. There are two Elder Scrolls games, one is online called Elder Scrolls Online — that is a multiplayer game, it is on PlayStation today. He’s talking about Elder Scrolls 16, that is projected for release in 2026 as a single-player game.

Elder Scrolls 16?! Obviously Microsoft’s lawyer means Elder Scrolls 6, but also... 2026?! You heard it here first, even if it’s really unlikely it’s coming in 2026.

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“All this for a shooter video game?”

Judge Corley is still focused on Call of Duty:

Judge Corley: All of this is for a shooter video game? For this one game?

FTC: I completely understand where you’re coming from. On the other hand, our responsibility over on this side of the room and the government is not to make a value judgment about the market is to protect competition in the market.

Judge Corley: It’s the game but of the people that care so much that they would actually switch to an Xbox that they wouldn’t otherwise?

FTC: It’s not about just switching... the harm to the PlayStation person who has Call of Duty is when they wake up after this deal closes and some new character is only on Xbox. It’s not that the person is going to switch, it’s that person’s experience as the value that they paid for, has been degraded in some way

Judge Corley then asks what the FTC says to PlayStation chief Jim Ryan saying “there’s nothing anti-competitive to making ‘Star-whatever’ [Starfield] exclusive?” The FTC doesn’t know the basis of why Ryan was upset. “Because he does the same thing,” says Judge Corley.

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“It’s not the harm to Sony, it’s the harm to consumers.” It’s up to the FTC to argue their case here and it’s mainly been a single Microsoft lawyer arguing against a number of FTC lawyers.

Both sides have now moved onto legal arguments and citing previous cases. Microsoft argues that it’s all about Call of Duty at the core and Microsoft’s deals completely address the concerns.

Microsoft’s lawyer points to Final Fantasy VI and how Microsoft “just lost part of that game,” or Minecraft where Sony held back devkits:

If they can’t figure out what the harm is, so they’re turning to you or us and saying you should figure it out because it’s ‘too hard for us’

Microsoft’s lawyer argues that game exclusives are happening all the time:

No witness said there was going to be partial foreclosure. No one said that no one had any examples of it. And if it’s the partial exclusivity, as you said, and as Mr. Nadella said I thought the best. That’s the world we live in because Sony’s the market leader, and that’s what they do. There are partial, if that’s what they want to call partial foreclosures, that’s happening all the time with these partial exclusivity timed exclusivity arrangements, and that is part of competition is not part of anti competitive behavior.

The FTC points to evidence from Jim Ryan’s testimony about partial foreclosure and “the harms, for example to Sony, in terms of optimization,” but Judge Corley wants to know where the harm is. “It’s not the harm to Sony, it’s the harm to consumers.”

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The FTC points to evidence from Jim Ryan’s testimony about partial foreclosure and “the harms, for example to Sony, in terms of optimization,” but Judge Corley wants to know where the harm is. “It’s not the harm to Sony, it’s the harm to consumers.”

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