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In a high-stakes legal move, Microsoft has sued Sony Interactive Entertainment as it prepares to defend itself in a looming antitrust lawsuit with the Federal Trade Commission (FTC).
For those unaware, Microsoft expects to face a looming legal battle with the US government’s Federal Trade Commission on the grounds that the Activision Blizzard acquisition would “stifle competitors” to an unlawful extent. A recent lawsuit shared by Stephen Totilo of Axios on Twitter (opens in new tab)has revealed that Microsoft has now sued Sony in an effort to build a solid lawsuit to defend its interests.
A subpoena is a court order directing an individual or company to attend a court hearing or to provide documentation prior to that hearing. According to the lawsuit, Microsoft wants Sony to offer details about PlayStation’s game production pipeline to strengthen its case.
Suffice to say, this kind of information is something Sony would most likely prefer to keep close to its chest. At the time of writing, Sony has until January 27 to respond to the subpoena. It could well choose to limit or quash the order in court, but whether this strategy will work out for the company remains to be seen.
Intrigues in love
In December 2022, the FTC announced its intention to sue Microsoft in an effort to prevent its $69 billion acquisition of Activision Blizzard. Sony previously expressed care (opens in new tab) that the acquisition aims to make PlayStation a “less close and effective competitor to Xbox” by allowing Microsoft to be the “one-stop shop for all of the best-selling console shooter franchises… [setting it] free from serious competitive pressures”.
In response to the lawsuit from the FTC, Microsoft and Activision to claim (opens in new tab) that their merger, and in particular the acquisition of the Call of Duty franchise, “cannot turn a highly competitive industry upside down.” “Providing quality content to consumers in more ways and at lower prices is what antitrust laws should promote, not prevent,” the response read. Microsoft has remained adamant that the acquisition is in the best interest of gamers, so it’s likely that this subpoena is intended to help the tech giant find evidence to support this particular argument.
This isn’t the first time in recent years that the FTC’s rulings have impacted the video game industry. In December 2022, the regulatory body ordered Epic Games to not only pay a $275 million fine for violating children’s privacy law, but also pay $245 million in refunds to users on the grounds that they had been misled “to incur unwanted costs” (via FTC.gov (opens in new tab)).
The FTC has also taken a closer look at the use of loot boxes in games, publishing a famous paper on the subject in 2020 that “highlights public concern”. [about] loot box marketing techniques that may encourage players to overspend or mask the true cost to players through confusing terms or inadequate disclosures” (via FTC.gov (opens in new tab)).
While it’s still early days, the outcome of the FTC lawsuit against Microsoft, as well as whether or not the court upholds Sony’s subpoena, will undoubtedly have a significant effect on the video game industry’s financial landscape.