Tom Warren

We’re on a 15-minute break so it’s time to recap what we’ve heard so far. The FTC’s opening statements largely focused on the main pillars of its case against Microsoft: Xbox exclusives, the Switch is a separate console, and cloud competition concerns.

That was the reaction from Xbox’s Matt Booty to Nvidia putting games on GeForce Now without Microsoft’s permission. Microsoft was “not putting our first-party IP on competing streaming or subscription services. No effing way,” in a 2019 email from Booty.

“We would have to adjust graphics and assets to run on Nintendo platforms,” says Xbox Game Studios chief Matt Booty. This would involve lowering frame rates and less complexity in games like Call of Duty. The FTC argues it would essentially be a new version of the game and that the Switch is separate to “high performance” Xbox and PlayStation consoles.

“People are moving to mobile,” says Microsoft counsel Beth Wilkinson. Microsoft offers up a breakdown of revenues across the gaming market and 94 percent are playing on mobile phones in a $145 billion mobile gaming market. Wilkinson argues Microsoft buying Activision is an opportunity for a mobile presence with Candy Crush, Call of Duty, and more.

Microsoft’s counsel, Beth Wilkinson, starts with the Xbox maker’s arguments. Microsoft argues Sony has been the leader in the console market and wants to protect its revenues. Wilkinson argues the acquisition will allow Call of Duty to be streamed via the cloud and available on a subscription service.

The FTC will call on two Nvidia executives to testify about cloud gaming and how the company has overcome technical limitations and latency. This is a key argument in the FTC v. Microsoft case, as Microsoft argues cloud gaming is simply an additional feature right now. Microsoft signed a deal with Nvidia for Xbox PC games. “What’s notable is Nvidia initially opposed this transaction, they signed one of the side deals… and then they supported,” says the FTC.

Microsoft wants to include Nintendo Switch in the overall console market definition, but the FTC wants to limit this to just Xbox and PlayStation. “Microsoft routinely looks at a generation 9 market that excludes the Switch,” says FTC lawyer James Weingarten. He also dismisses gaming PCs as they’re “not in the same market” due to price and more.

The FTC’s counsel, James Weingarten, says “Activision makes some of the most important video games in the US” with titles like CoD, Diablo, and Overwatch. “Microsoft and its competitors need triple-A content for its consoles... they license Activision content and pay a premium for it.” Weingarten says the evidence the FTC will put forward over the next few days is “a fraction” of the total that can raise anti-competitive concerns.

The FTC and Microsoft both have around 20 minutes each of opening statements before we move on to witness testimony this morning. We’ll be hearing from Xbox Game Studios chief Matt Booty, Bethesda’s Pete Hines, and Sarah Bond, head of Xbox creator experience.