Idas since I'm not a lawyer, I'd appreciate your thoughts or feedback on my interpretation of the FTC's claim "Microsoft decided to make several of Bethesda's titles including
Starfield and
Redfall Microsoft exclusives despite assurances it had given to European antitrust authorities that it had
no incentive to withhold games from rival consoles."
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EC ZeniMax filing: https://ec.europa.eu/competition/mergers/cases1/202124/m10001_438_3.pdf
In this Notifying Parties' view on ZeniMax games availability, strategy, and incentive, Microsoft says they would not limit/remove ZeniMax titles from existing consoles and have no incentive to do so because the metrics necessary to make sense (sell X consoles and gain Y users) are highly unlikely. This is the
total wholesale removal of titles like Skyrim, DOOM, ESO, Wolfenstein, from PlayStation Network and Nintendo eShop ("
loss from not distributing", "
cease or limit making ZeniMax games available for purchase", etc as highlighted). This page is often being shared as the evidence the FTC is referencing to, but the FTC conflated new
"exclusives" with
"withholding games from rival consoles", while the European filing refers to the distribution/availability of ZeniMax games for purchase as a whole.
Often ignored is the following section: the Commissions' assessment of the above Notifying Parties' view.
The area I highlight here is their conclusion:
The European Commission's considerations are consistent with Microsoft's declared strategy. Information regarding future strategy is redacted, but the references are cited in the footer with Form CO paragraphs 7-17 and Annex 3. The conclusion from the EC on ZeniMax/Microsoft's future strategy and overall strategy is that there would not be an incentive to foreclose rival distributors.
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From the "Get The Facts" PDF shared yesterday: https://news.microsoft.com/wp-content/uploads/prod/sites/642/2022/12/Get-the-facts-ZeniMax.pdf
There are multiple examples of quotes from Form CO cited and highlighted above, or in close proximity to the cited paragraphs re: Microsoft's strategy.
"Future decisions on whether to distribute ZeniMax games for other consoles will be made on a case-by-case basis, taking into account player demand and sentiment. Factors that will inform Microsoft's decision-making on future games include consumer demand and preference and the willingness of third parties to work with Microsoft to launch games for their devices." (Microsoft ZeniMax Form CO, January 29, 2021, at p. 5). [Not cited, but in the surrounding relevant topic]
"Microsoft will not make any existing ZeniMax games exclusive to Xbox. They will continue to be available for purchase for PCs and other gaming hardware for which they are currently available, which will ensure that they continue to be available to current players of those games. Microsoft will not be removing players' access to any current games, no matter where they currently play." (Microsoft ZeniMax Form CO, January 29, 2021, at p. 13)
"For future ZeniMax games, Microsoft intends to make these games available for purchase on PC and, where the games are designed as native mobile games, on mobile devices running both iOS and Android. Future decisions on whether to distribute ZeniMax games for other consoles will be made on a case-by-case basis, taking into account player demand and sentiment, Microsoft's strategic and financial goals, and the willingness of third-party gaming hardware providers to run Microsoft games and services. Microsoft will make all acquired games and future releases available to subscribers of its Game Pass service on the day the games are launched (which can be used to play on PCs, Xbox consoles and Android mobiles), but does not currently anticipate distributing them through other subscription services. This reflects Microsoft's broader strategy to promote a subscription-based model which it believes will generate value and choice for game players. This policy would not preclude players from downloading or buying these games outside of Xbox Game Pass: Microsoft anticipates that existing games and future multi-platform games will be available for purchase from relevant digital storefronts of all major consoles and PCs." (Microsoft ZeniMax Form CO, January 29, 2021, at pp. 13-14)"
So, the EC's assessment took into account Microsoft's statements that they would keep distributing existing games and multi-platform games where they are, honor Deathloop/Ghostwire exclusivity contracts, and that future games would be made on a case-by-case basis, while also considering the scenario they did the opposite. Either way, the incentive was not there, and there was no SLC, so they approved of it. There was no "rug pull" so to speak of Microsoft saying one thing to the European Commission and then suddenly making Redfall/Starfield exclusive when they said they wouldn't. That possibility was made aware to the European Commission as emphasized above.
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In the CMA Phase 1 Full-Text: https://assets.publishing.service.g...533/MSFT.ABK_phase_1_decision_-_1.09.2022.pdf
Third parties complained similarly to what the FTC is alleging here, but in the realm of
multi-game subscription services and
not consoles:
Third-party views
230. Several competitors who spoke to the CMA referred to Microsoft's behaviour in relation to past acquisitions, including that of ZeniMax Media, where Microsoft did not uphold its promise to continue making Bethesda content available on multiple stores and platforms. [261]
Citation:
[261]Submission from a third party, submitted on 26 July 2022, pages 18 and 19; note of a call with a third party, dated 23 May 2022, paragraph 12; note of a call with a third party, dated 6 May 2022, paragraph 22; and third-party response to the CMA's Cloud Gaming questionnaire dated 28 July 2022, page 29.
It is unclear who these competitors are, but I would guess Sony, maybe Google, and maybe Nvidia given the third party response to Cloud Gaming. Regardless, these are third party interpretations of Microsoft's behavior and what they promised to governments and not necessarily accurate and can be self-motivated (such as with Sony's arguments).
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So, in conclusion it would appear to me that the FTC's angle on Microsoft reneging their commitment re: ZeniMax games availability is misleading at best and intentionally deceptive at worst. The European Commission was fully aware of the possibility of ZeniMax games going fully exclusive (i.e. pulled out from stores) or partially exclusive (i.e. select titles being exclusive like Starfield) and it was approved and considered. There was no "rug pull" as the decision to make some games exclusive would be case-by-case and driven by Microsoft's strategic and financial goals.
seekingalpha.com
