Sony Interactive Entertainment’s chief executive, Jim Ryan, originally did not view Microsoft’s $68 billion bid to buy Activision — and therefore Call of Duty, and other franchises — as an existential threat, a Microsoft lawyer told a federal judge on Thursday. But, she said, Ryan later changed his tune when his superiors sought a more aggressive and obstructive stance toward the deal.
Ryan emailed Chris Deering, formerly the boss of Sony Computer Entertainment Europe, to discuss Microsoft’s proposed acquisition of Activision shortly after it was announced in January 2022. Beth Wilkinson, Microsoft’s lead attorney for this case, read the email in a hearing Thursday in which the Federal Trade Commission is seeking to stop any acquisition activity between Microsoft and Activision.
“Mr. Ryan is saying, not realizing that other people are going to read this email, and he says ‘It is not an exclusivity play at all; they’re thinking bigger than that,’” Wilkinson told Judge Jacqueline Scott Corley of the Northern District of California. “And they have the cash to make moves like this.”
“‘I’ve spent a fair bit of time with Phil [Spencer, the head of Xbox] and Bobby [Kotick, the Activision chief]’” Wilkinson continued, quoting from the email, “and I’m pretty sure we will continue to see COD on PlayStation for many years.’”
Wilkinson said Spencer and his boss, Satya Nadella, Microsoft’s chief executive, had both reached out to Sony to assure them that Call of Duty would remain fully supported on PlayStation.
“And what does [Ryan] say in terms of the threat to his business or competition?’” she said, referring again to an email disclosed through the lawsuit. “He says, ‘We have some good stuff, we think,’ which turned out to be buying another studio, called Bungie. [...] I’d rather this hadn’t happened, but we’ll be OK. We’ll be more than OK.’”
Wilkinson then tried to discuss an offer Microsoft says it made to Sony to keep Call of Duty a parity launch — that is, same day and date on PlayStation, with all features — for the next 10 years. A Sony lawyer interjected to say that discussion was confidential, and Wilkinson backed off further mention of the deal. However, “The offer allows them to get exactly the same thing that Xbox will get in every way,” she said.
Last fall, Spencer told The Verge that Microsoft “provided a signed agreement to Sony to guarantee Call of Duty on PlayStation, with feature and content parity, for at least several more years beyond the current Sony contract, an offer that goes well beyond typical gaming industry agreements.”
Days later, in an interview with GamesIndustry.biz, Ryan said Microsoft “has only offered for Call of Duty to remain on PlayStation for three years after the current agreement between Activision and Sony ends.” Shortly after, Microsoft responded that “it makes zero sense for Microsoft to remove Call of Duty from PlayStation given its market-leading console position.”
That market position was spotlighted in Wilkinson’s introductory argument to Judge Corley. “You can measure it by revenue, you can measure it by the units sold, the actual consoles [...] no matter how you look at it, Xbox comes in third,” she asserted. “If you take the FTC’s definition [...] and you take out Nintendo Switch, it only gets worse for Xbox.”
Wilkinson said the Microsoft-Activision Blizzard acquisition was as much about Microsoft moving into the mobile gaming space — where it has next to no presence, compared to Apple’s iOS and Google’s Android devices and marketplaces — as it was acquiring content for its PC and Xbox Game Pass subscription service.