Tom Warren

Senior Correspondent

Tom WarrenJun 28, 2023

A day four recap.

We’ve heard from multiple witnesses today, including Activision CEO Bobby Kotick and Microsoft CEO Satya Nadella. If you want a recap of Bobby Kotick’s testimony it’s right here and here’s a recap of Dr. Elizabeth Bailey and Nvidia’s Jeff Fisher. Let’s recap Nadella first:

• The FTC started out by quizzing Nadella on Xbox market share

• Nadella also got asked about Microsoft’s gaming targets

• Cloud gaming includes Xbox Live, argues Nadella

• Nadella wants to take cloud mainstream

• Nadella commits to shipping Call of Duty on PlayStation

• Nadella says he wants to end Xbox exclusives but blames Sony

Let’s recap Dr. Dennis Carlton, an economics expert that Microsoft is relying on:

• The FTC pokes holes in Dr. Carlton’s report and reveals he’s getting paid $2,000 an hour (I’m clearly in the wrong job here)

• We’re back on the Call of Duty argument

• Some tense exchanges as Dr. Carlton struggles

• A Verge article appears in court

• Dr. Carlton is forced to admit he hasn’t read many of Microsoft’s cloud agreements

See you tomorrow at 8:30AM PT / 11:30AM ET for the final day of testimony and closing arguments.

Tom WarrenJun 28, 2023

Day four is over.

Microsoft had some brief questions for Dr. Carlton, but the day is done and dusted. Judge Corley is now trying to figure out the final day of this hearing tomorrow. It looks like we’re going to hear from Xbox CFO Tim Stuart, Microsoft CFO Amy Hood by written declaration, and Steve Singer, SVP of developer relations at Nintendo, by video deposition.

The plan is to finish evidence by noon and closing arguments at 2:30PM PT / 5:30PM ET.

Tom WarrenJun 28, 2023

FTC continues to poke holes in Dr. Carlton’s report.

Dr. Carlton admits he didn’t base his assessment or analysis based on Eisler’s comments on the Nvidia agreement.

Judge Corley: were you aware of them? [the comments]
Dr. Carlton: I don’t recall seeing this
Judge Corley: I understand

It’s getting towards the end of the day and the FTC is questioning why Dr. Carlton didn’t include the countries where Microsoft’s cloud gaming agreements have been signed. This is important because this is a US case and the FTC wants to exclude global cloud gaming agreements that were signed with companies outside the US.

Dr. Carlton also didn’t take into account Google’s testimony about cloud gaming latency the further away gamers are to servers.

Tom WarrenJun 28, 2023

A Verge article appears in court.

Dr. Carlton cites a Verge article in his report and the FTC wants to know why (why not I say!).

FTC: The Verge article is a public article, correct? It does not include all of the terms of the Nvidia agreement, correct?
Dr. Carlton: I would assume so, yes
FTC: Especially since the terms of that agreement is confidential
Judge Corley: Did you read the Nvidia agreement?
Dr. Carlton: I can’t remember. My recollection is that I was trying to characterize the agreement, and this article characterized the agreement, therefore I relied on this article rather than me reading the agreement and me characterizing it.

Tom WarrenJun 28, 2023

Some tenses exchanges.

Microsoft’s expert, Dr. Carlton, is struggling here after the FTC’s lawyer questioned his expertise and how much he’s being paid. I sense that Judge Corley is frustrated at some of his answers and at some of the FTC’s questioning.

FTC: You are not an expert in the technology of video games?
Dr. Carlton: Correct.
FTC: You’re not an expert on the quality of a COD game on Nintendo Switch?
Dr. Carlton: I’m not offering an opinion on that.

Microsoft CEO says he wants to end Xbox exclusives but blames Sony

Tom WarrenJun 28, 2023

Nadella commits to shipping Call of Duty on PlayStation.

Microsoft lawyer: Will Microsoft forego sales of Call of Duty on PlayStation by withholding access?

Nadella: It makes no economic sense or no strategic sense. Our goal with Activision in particular, in their content and our content, is to get it on more platforms. That’s what we’ve done with Office and that’s what I want to do with gaming

Microsoft: Will you commit to continue delivering Call of Duty on PlayStation?

Nadella: 100 percent

Microsoft’s lawyers have nothing more to ask. Nadella’s questioning was light work from both the FTC and Microsoft today.

Tom WarrenJun 28, 2023

Does cloud take away from consoles?

Nadella talks about cloud gaming as expanding gaming to more platforms:

One mechanism we wanted to use was cloud streaming as a way to bring more competition to mobile platforms and bring sort of more opportunity for more publishers even so that has been a goal

Tom WarrenJun 28, 2023

Nadella wants to get rid of exclusives, but Sony.

The FTC’s questioning was fairly lightweight there, and we’re on to Microsoft’s own lawyer talking to Nadella. He talks about exclusives:

If it was up to me I would love to get rid of the entire exclusives on consoles, but that’s not for for me to define especially as a low share player in the console market. The dominant player there [Sony] has defined market competition using exclusives, so that’s the world we live in. I have no love for that world.

Tom WarrenJun 28, 2023

The FTC and Nadella keep looking at confidential documents.

It’s hard to understand exactly what the FTC and Nadella are looking at right now, but it appears the FTC is showing Microsoft’s cloud strategy and its cloud gaming competitors. We might find out more about this once the redacted evidence is available.

Either way, the FTC is digging into Microsoft’s internal targets and strategy for cloud gaming here.

One particular email includes a conversation from November 2022 between Kareem Choudhry (xCloud chief), Sarah Bond, and Nadella and it references converting users to Game Pass.

Tom Warren

Senior Correspondent

Senior Correspondent

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Tom Warren

Senior Correspondent

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