More from FTC v. Microsoft: all the news from the big Xbox courtroom battle
Sony’s PlayStation chief Jim Ryan says the company is wary of sharing dev kits and next-gen console information with Microsoft for their games:
“We simply could not run the risk of a company that was owned by a direct competitor having access to that information.”
Sony made the decision to delay supplying PS5 devkits to Microsoft for Minecraft:
“The development kits allow developers to have visibility and to work on the feature set that our new console will deploy. It would typically mean a developer may bring its content to the new platform later than would otherwise be the case. The commercial risks associated with the knowledge of these feature sets leaking to our principle competitor is not something we’d rely on any contract to enforce.”
Sony’s PlayStation chief Jim Ryan says it’s beneficial for third-party developers to sign an exclusivity deal for PlayStation because “development efforts required to make that game reduces.”
The FTC has been arguing that exclusives are bad for competition and that Microsoft purchased Bethesda and kept games like Redfall, Starfield, and the upcoming Indiana Jones off PS5. Ryan expected these games to remain on PlayStation:
“I think that pretty much every Bethesda game was multi-platform prior to the acquisition.”
The FTC and Microsoft have been battling over whether the Nintendo Switch is a game console and whether it competes with the PlayStation and Xbox. Sony’s PlayStation chief Jim Ryan says “we consider Nintendo to participate in a different market segment to Xbox and PlayStation.” When asked to expand on that, he says:
Nintendo’s hardware technology is of a much less sophisticated nature to PlayStation or Xbox. Its hardware typically retails for a cheaper price and its audience is aimed rather younger.
PlayStation chief Jim Ryan is asked why Xbox games resonate better with customers in the US than outside the country:
“Many of their games involve an element of shooting and online multiplayer. Both of which typically are more popular in the US than they are outside of the US.”
We’re going to get a lot of testimony from PlayStation chief Jim Ryan. The video will run for 1 hour and 10 minutes in total. Ryan confirms Sony tracks Microsoft’s console sales.
FTC: How have Xbox gen 9 consoles performed in terms of sales?
Ryan: Like us they have been troubled by supply shortages we understand, but demand for their products is robust.
Sony’s PlayStation chief isn’t in the courtroom or live via a video link, but we’re about to hear from him thanks to a pre-recorded deposition video.
Sony has emerged as one of the main opponents to Microsoft’s Activision deal. Microsoft dropped a bombshell Sony email last week showing that Ryan knew Microsoft’s proposed acquisition wasn’t about exclusives and that PlayStation would be fine.
The surprise revelation runs counter to Sony’s arguments against Microsoft’s Activision Blizzard deal and its filings with regulators. Sony has maintained it fears Microsoft could make Call of Duty exclusive to Xbox or even sabotage the PlayStation versions of the game.
“It has been brought to our attention, at least one person was live streaming the audio last week. When you do that what you are doing is jeopardizing the ability of us to even offer live streams,” says Judge Corley. “So those of you who have recorded or live streamed, you are jeopardizing that and probably not just for this proceeding but for all proceedings across the United States, if you continue to do that.”
We’re still waiting for things to start here. The courtroom is still sealed, with reporters and members of the public still waiting to get in. The doors have just been unlocked for people to enter into the courtroom, so we should get going shortly.
The FTC and Microsoft have agreed not to call Xbox’s Lori Wright as a witness. Wright testified in the Epic v. Apple case nearly two years ago, so parts of that testimony will now be used instead. The testimony is mainly focused on the Nintendo Switch as a competitor to Xbox, where Wright previously said it was a competitor but less so than PlayStation. Hopefully the FTC and Microsoft will stop arguing about that particular point (of course they won’t!).
Without Wright on the stand it’s mostly a day of video depositions. Microsoft CEO Satya Nadella and Activision CEO Bobby Kotick will both appear tomorrow.
Welcome to day three of FTC v. Microsoft, where the third installment of this thrilling series looks set to deliver a lot of video testimony. We’ll be hearing from PlayStation chief Jim Ryan in a pre-recorded video deposition and Nvidia execs Jeff Fisher and Phil Eisler in similar video depositions.
The Nvidia testimonies were recorded before Microsoft signed a cloud gaming deal with Nvidia, so they will detail the company’s opposition to the Activision Blizzard deal before that crucial agreement.
The FTC is also calling on its economic expert, Dr. Robin Lee, for testimony today. Microsoft is calling its own expert, Dr. Elizabeth Bailey.
Microsoft’s Xbox chief, Phil Spencer, compared the Xbox business to Polaroid and its struggles to adapt to digital photography. In a 2019 email Spencer said it was important to have a mobile gaming strategy:
First, we are exactly like Polaroid. We are core gaming which isn’t growing it’s TAM (analogous to film photographers) while mobile gaming MAU is growing WW at a significant rate (like digital photography was growing).
We have the list of witnesses that will testify tomorrow, starting at 8:30AM PT / 11:30AM ET:
• Jim Ryan, Sony (video deposition)
• Jeff Fisher, Nvidia (video deposition)
• Phil Eisler, Nvidia (video deposition)
• Dr. Robin Lee, FTC economic expert
• Dr. Elizabeth Bailey, MS economic expert
• Lori Wright, Xbox (joint stipulation)
Lots of video testimony here and most of it will have been filmed months ago. Stay tuned for all the latest news in the morning.
That’s Matt Booty, Xbox Game Studios chief at Microsoft, while talking about how much the company needed to spend to get a foothold with its Game Pass subscription — which could have potentially included scooping up Sega or Bungie.
A new document published as part of the FTC’s lawsuit against Microsoft details some developers the company has had its eye on watching — including No Man’s Sky developer Hello Games and Hollow Knight developer Team Cherry.
This document is from 2021, so Microsoft’s views may have changed. But perhaps one these studios will be the next to get subsumed into the Microsoft machine.
FTC v. Microsoft day two was all about console wars and whether Xbox is really in a distant third place.
It has been a long day of questioning and we even ran over the allocated time to squeeze in witness testimony from former Google Stadia product lead Dov Zimring.
If you’re interested in what Xbox chief Phil Spencer had to say earlier please check out our first recap of his testimony, followed by our second recap after the lunch break.
The hearing will resume on Tuesday at 8:30AM PT / 11:30AM ET so check back here for all the latest news. Thanks for tuning in, and have a great weekend!
It feels like Judge Corley grew tired of the FTC’s questioning of Phil Spencer earlier. Judge Corley cut in when the FTC was asking if Spencer could legally bind Microsoft into keeping Diablo on PlayStation. A Microsoft lawyer objected and Judge Corley said “your point has been made, move along.”
Then later Judge Corley directly cut off the FTC’s questioning of Spencer after the regulator’s lawyer asked if Spencer could make a Call of Duty commitment for bringing the game to a Sony PlayStation cloud service.
“I don’t think that’s it, I’m going to cut off the questioning there,” said Judge Corley.
There was an audible “ooof” from a few members of the audience watching on, MLex reporter Michael Acton, who is in the courtroom, says.
According to former Google Stadia product lead Dov Zimring, the company did have an appetite for AAA games — the surprise shutdown of the company’s internal games studios was because a five-year game development cycle had become pricier than projected.
“It was going to be far more expensive in the environment that we found ourselves in,” says Zimring, referencing game industry consolidation as an underlying reason.
Zimring also confirmed reports that Google paid developers to port their games to Stadia, but the FTC’s lawyer let him get away without publicly confirming how much.
Google’s former Stadia product lead, Dov Zimring, has given us some early insights into Stadia development:
“We had prototyped on Windows early on... the mission we had established at the very beginning was to enable revolutionary experiences... we saw Windows as limiting to innovate in that regard because we didn’t have control over the operating system.”
Google did hint at Windows games running on Stadia, but that’s very different to actually running Stadia games on a Windows server.
So why didn’t Google go with Windows for Stadia?
“[Windows] would have doubled our total cost of operating on hardware that was equivalent to the 8th generation consoles, like the PlayStation 4.”
The FTC opens its questioning of Dov Zimring, Google’s former Stadia product lead, by asking what Stadia was and when it was shut down.
Zimring says it was key for Stadia to “have sufficient content... to have blockbusters at the right time,” which is probably a big part of why it failed. Asked about Stadia’s technology, Zimring says:
“To our knowledge we had the best technology in the market. We had performance capabilities that didn’t exist in the [cloud] market like 4K.”
Up next we have Dov Zimring, Google’s former Stadia product lead. The FTC has been focusing on Microsoft’s cloud competition in this case, so we’re likely to hear more about that. Perhaps we’ll even get some insight into why Google shutdown Stadia earlier this year.
During yesterday’s testimony we learned that Microsoft was working on a separate “dedicated” version of Xbox Cloud Gaming in September 2022. That’s the same month Google announced its Stadia shutdown. Microsoft now says it’s no longer planning a separate version due to costs and usage.
