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Tom Warren

Tom Warren

Senior Correspondent

Senior Correspondent

    More From Tom Warren

    Tom Warren
    Tom Warren
    A third lawyer tries to explain Xbox switching.

    We now have a third lawyer trying to explain how many people will convert to Xbox if Microsoft withheld Call of Duty.

    It feels like Microsoft’s witness, Dr. Bailey, offered an easy to understand argument for Judge Corley. Dr. Lee’s testimony wasn’t very clear for us to follow and I think that’s coming through with Judge Corley’s questioning here. But this is a complicated case with both sides arguing about different data to try and prove their points.

    Tom Warren
    Tom Warren
    A new FTC lawyer is explaining Call of Duty exclusivity.

    New FTC lawyer tries to bring its closing argument back on track.

    “What’s tricky about this case is that you have to look at the specific data for each game,” he argues. Judge Corley wants to know what it is about Call of Duty that they’d abandon their console of choice and buy an Xbox? FTC:

    If someone is spending $70 on Call of Duty they likely value that much more. Once they lose that because they no longer have access to the game on the platform they have to make a choice.

    The FTC argues they choices are forgo the game or maybe play it on another console they might own if they happen to have an Xbox or they’ll have to go buy an Xbox. “This results in a share shift to Xbox,” says the FTC.

    Judge Corley wants to know how you calculate the number of people would switch to Xbox, so Microsoft would have the economic incentive to foreclose:

    Judge Corley: If everyone would give up on Call of Duty they don’t have the incentive. So how do you figure out the number of people who give up vs. buying an Xbox?

    FTC: I’m not an economist again, but that’s based on looking at the behavior of players, based on potential past exclusivity and looking also at the sales behavior of probability.

    Tom Warren
    Tom Warren
    Judge Corley is questioning the FTC’s evidence.

    Judge Corley says Dr. Bailey, who testified for Microsoft, “actually looked at real world data” and she wants to know what the FTC’s witness, Dr. Lee, looked at.

    Judge Corley references that 62 percent of all PlayStation owners don’t play Call of Duty at all. “They’re not going to miss it, the foreclosure won’t affect them.”

    Judge Corley: How do you decide that Call of Duty is so important to them?

    The FTC struggles to respond and references Jim Ryan’s testimony instead of answering the question related to Dr. Lee’s testimony. “That’s not what I asked,” says Judge Corley.

    Judge Corley is really fixated on Call of Duty here. Another FTC lawyer has stepped in to try and help explain.

    Tom Warren
    Tom Warren
    Would we be here if Sony had a deal with Microsoft?

    Judge Corley wants to know what the harm to consumers is if the merger goes ahead and whether we’d be here if Sony had a deal with Microsoft for Call of Duty.

    FTC: If the merger goes forward and if you believe that Microsoft has the incentive to advantage its own platform. There will be content, there will be timing issues, there will be exclusivity that benefits Xbox and not the PlayStation.

    Judge Corley: Aren’t we just talking about Call of Duty? Sony just acquired another publisher and they make a lot of stuff exclusive. You’ve told me this has really always been about Call of Duty, how’s that going to drive?

    Judge Corley: If Sony had a deal with Microsoft for Call of Duty, would we be here?

    FTC: I think we would have still had an investigation.

    Judge Corley: That’s good, but here on a preliminary injunction.

    FTC: We would be here because of concerns about the other markets.

    Judge Corley: Outside the console market, ok that’s fair.

    Tom Warren
    Tom Warren
    FTC is up first.

    FTC’s first opening argument:

    Last Thursday, we promised the court the evidence in this hearing would show at the Federal Trade Commission has raised substantial questions about this proposed transaction. Substantial questions about whether this transaction would cause anti competitive effects. All the evidence is showing, your honor, that Call of Duty and triple-A games in particular drive games. The majority driver by far the synergies from Microsoft comes from driving users to engage and join Game Pass, because they understand the value of this content.

    Judge Corley wants to know which Bethesda game is comparable to Call of Duty? FTC says The Elder Scrolls. FTC also argues Call of Duty is “so exceptionally valuable and so unique.”

    Tom Warren
    Tom Warren
    Closing arguments are about to begin.

    We’re now on the homestretch of this hearing after five days of grueling testimony for all involved. It’s time to hear the closing arguments from both the FTC and Microsoft. After this Judge Corley will make a final decision in the coming days.

    Tom Warren
    Tom Warren
    FTC Microsoft docs also spilled Azure revenue.

    Investors have been trying to work out Microsoft’s exact Azure revenue for years and now they know thanks to the FTC v. Microsoft hearing. Unredacted documents, that have since been removed, have revealed Azure generated half the revenue of AWS in the 12 months ended June 2022. The Information reports that Azure generated $34 billion in 12 months compared to $72 billion for AWS in the same period. Sony has also had confidential data revealed in this case.

    Tom Warren
    Tom Warren
    30 minutes until closing arguments.

    The end of FTC v. Microsoft is nearly here. Closing arguments will commence at 2:30PM PT / 5:30PM ET / 10:30PM UK. We’re expecting there to be a lot of back and forth during these arguments as both sides try to make their final case to Judge Corley.

    If you’ve missed out on the hearing over the past few days, here’s where to catch up:

    Microsoft Agrees To Buy Video Game Publisher Activision Blizzard
    Tom Warren
    Tom Warren
    The UK and Canada situation.

    The FTC v. Microsoft witness testimony might be over for the day in the San Francisco, but it’s been a day full of news from regulators from outside the US.

    First we learned that the Competition and Markets Authority (CMA) in the UK filed to try and delay Microsoft’s appeal of its Activision Blizzard acquisition decision. The Competition Appeal Tribunal (CAT) shut that request down, as it would have pushed the appeal process from July to October — “contrary to justice and fairness.”

    Next Canada’s competition regulator intervened with a letter to Judge Corley pointing out it had “concluded that the proposed merger is likely to result in a substantial prevention and / or lessening of competition” in consoles, multi-game subscriptions, and cloud gaming.

    Microsoft hit back almost immediately with a statement pointing out that the formal period for Canada’s regulator to prevent the deal from closing has already passed.

    There’s already a lot going on with the FTC v. Microsoft case and many moving parts with other regulators as Microsoft approaches the July 18th deadline when its deal with Activision Blizzard expires.

    Tom Warren
    Tom Warren
    It has been a long week.

    As we approach closing arguments, Frank has had enough. He’s not been able to play ball for most of this week, so he’s gonna snooze through the closing arguments instead.

    And no, he’s not named after Frank Shaw, lead communications at Microsoft. The only similarities here are that they both growl sometimes 😉

    Frank the mini dachshund.
    Frank the mini dachshund.