Video Games

Xbox FTC Trial Day 1: The FTC Went on the Attack Against Bethesda. How Will Microsoft Respond?

A few months ago, the U.K.’s Competition and Markets Authority centered its block on Microsoft and Activision’s merger on cloud gaming, temporarily allaying fears that Call of Duty’s exclusivity would undermine the merger. looked like

But today, the FTC’s meeting with Microsoft in a US court over a possible impending moratorium on the acquisition has once again drowned out any concerns about Call of Duty. And that’s in part thanks to the no-longer-secret inner workings of Xbox’s previous deal to acquire ZeniMax in 2021.

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The FTC has already removed several hints suggesting it is preparing to cite ZeniMax as an example, most notably suggesting that the merger is a “strong investment” against Activision’s larger takeover. in a recent filing it said was “evidence”. However, the exact discussion on this point was not revealed until today when FTC attorneys brought up Bethesda’s global publishing chief Pete Hines to answer questions about the previous merger.

Hines was on the witness stand for just an hour, and was positioned between prosecution witness Matt Booty, head of Xbox Game Studios, and defense witness Sarah Bond, Xbox corporate vice president. The main allegation of the FTC’s allegations, consistent in both the filing and review against Hines, was that ZeniMax had released games on multiple platforms, including the PlayStation, before being acquired by Xbox. There’s no such thing on Xbox right now, but the same will inevitably happen once Xbox gets his Activision.

One element of the FTC’s preparations ahead of Hines’ testimony included speaking with Xbox game studio head Matt Booty about, among other things, game exclusivity. After an Xbox attorney turned over evidence showing that games like Ghostwire: Tokyo, Outer Worlds and Minecraft: Legends are being offered to his non-Xbox platforms under its control, the FTC has filed a number of listings. It countered that the game was already coming to platforms other than Xbox. PlayStation before merger. Only a few (especially his Minecraft stuff) have gone truly cross-platform at Xbox’s behest, and ZeniMax’s catalog, in particular, has become an exclusive as soon as it clears its final contractual obligations with Sony. I sharply steered into the realm. Especially when it comes to Redfall, Starfield, and MachineGames’ upcoming Indiana Jones game.

With Hines on the witness stand, the FTC started at Starfield. Lawyers referred to a film clip. Hines’ 2021 GameSpot Interview, Hines said Starfield’s exclusivity wasn’t considered until after ZeniMax was acquired by Xbox. Additionally, Hines proactively apologized to fans of ZeniMax games who were disappointed by the news, stating, “There’s not much I can do about it.”

The FTC then brought up discussion of ZeniMax studio MachineGames’ upcoming Indiana Jones game, presenting evidence that it was originally licensed by Disney for a multi-console release on PS5 and Xbox. It was only after the acquisition that the contract was amended to stipulate an Xbox/PC exclusive and he a one-day Game Pass release. And the decision to do so was not in Mr. Hines’ hands, according to emails submitted in evidence. He was also unsatisfied when he learned that other games such as Call of Duty might still have the option of a PlayStation release.

“I’m confused. Isn’t the following the opposite of what I’ve been asked to do in other titles?” Hines wrote in a 2022 email. there is Xbox Blog Post He talked about plans for an “open app store.”

“Was someone at Xbox thinking of warning us about this? Todd [Howard’s] I didn’t realize he was going to DICE in a few weeks and that the experts might find him and ask him why the following is OK. [Call of Duty] OR Not an Activision Blizzard game, but [The Elder Scrolls 6] Or Starfield? Or in every interview he does from now on? ”

Later in the investigation, the FTC brought up similar arguments further, proving that Hines had been instructed by ZeniMax CEO James Reeder to seek clarification from Xbox, again leaving the decision entirely out of ZeniMax’s hands. suggested that So Hines approached Xbox head Phil Spencer and brought him into a phone conversation to track down the email and possibly end the discussion.

The inevitable Call of Duty conundrum

This seems to be what the FTC is claiming will happen with Call of Duty and other Activision games: Xbox can sign whatever 10-year deal it wants to keep Call of Duty available, but future games. will inevitably follow Starfield and Indiana’s path, Jones argues how badly Xbox would be hit financially or reputationally by such a move.

And certainly, Xbox has made substantive arguments, both in its legal filings and elsewhere, as to why exclusive distribution of Call of Duty could potentially harm its business. Even the CMA in the UK seems to accept this claim. But today in court, the company’s handling of the ZeniMax case in particular seemed to be struggling.

During cross-examination, Hines noted that making Starfield exclusive actually made it easier for the team to develop. He referred to Todd Howard’s comment in his calling Starfield “an irresponsibly massive game”, saying that the fewer platforms QA tests had to be run on, the more tests they could do. , said the game results would be better.

This seems to be what the FTC is claiming, it will be: Xbox can sign any 10-year deal it wants…but future games will inevitably go the way of Starfield or Indiana Jones will walk

“We’re not going to put this game down [Starfield] In my opinion, it will be released within nine weeks if we support the entire additional platform,” he said.

But the rest of his argument wasn’t as strong. When asked further about his understanding of exclusivity from his phone conversation with Spencer, he said, “We were going to continue with our approach of looking at each title and deciding what was best.” Stated. Those games, what was best for us. ”

And when the judge asked Hines why he amended the Indiana Jones agreement while maintaining other agreements to bring the game to PlayStation, Hines’ answer was that he had changed his mind entirely. didn’t seem to admit it.

“There are a number of different reasons, but I think the main reason is that we’re trying to reduce risk and get some certainty,” he said, wanting to spend more time on QA. He repeated his own statement. Fewer platforms to work with. “And to tell you the truth, we also liked the idea of ​​taking it and bringing it to Game Pass and how many players we could get there.”

The judge pushed back, noting that all of these elements were present when ZeniMax first signed the contract to create the game.

“We were a small independent publisher…we couldn’t let this go,” Hines said, noting that the Xbox acquisition would give ZeniMax the stability it needed to make that decision. , he added, while it had to keep Disney happy as an independent studio. Release to a wider audience.

Starfield vs Minecraft

Hines’ testimony ends here, and Xbox looks a little less convincing. But it’s worth pointing out that this is only the first day of a multi-day trial, and both Mr. Booty and Mr. Hines are witnesses selected by the FTC. Coming forward out of order, Bond gave a much more compelling testimony (for Microsoft) about Xbox’s struggles to bring Activision content to the platform under current market conditions. We underestimated Xbox’s power in the cloud gaming space enough. And Xbox expects multiple other witnesses in the next few days.

Additionally, while the FTC has so far spent a lot of energy proving that Xbox will treat Activision like Zenimax, Microsoft says its own goal is to make a potential new subsidiary like Minecraft. It was clarified that it is to prove that it handles to Enjoy global cross-platform support with multiple multi-platform spin-offs. Exactly what form this debate will take remains to be seen, but Xbox has repeatedly sown the seeds of comparisons to Minecraft throughout both this trial and his match with the CMA, so it’s worth further investigation. It seems likely that this problem will appear in .

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