In a high-stakes legal move, Microsoft has served Sony Interactive Entertainment with a subpoena as it prepares to defend itself in an impending antitrust lawsuit with the Federal Trade Commission (FTC).
For those not in the know, Microsoft is expecting to fight an imminent legal battle with the US government’s Federal Trade Commission on the grounds that its acquisition of Activision Blizzard would “suppress competitors” to an unlawful extent. A recent court filing, shared by Axios’ Stephen Totilo on Twitter (opens in new tab), has revealed that Microsoft has now subpoenaed Sony in an effort to build a sturdy legal case to defend its interests.
A subpoena is a legal writ ordering an individual or corporation to either attend a court hearing or produce documentation in advance of that hearing. According to the court filing, Microsoft wants Sony to offer up details of PlayStation’s game production pipeline to help strengthen its case.
Suffice it to say, this kind of information is the sort of thing that Sony, most likely, would 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 opt to move to limit or quash the order in court, but whether or not this strategy will play out for the company remains to be seen.
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 concern (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 the best-selling shooter franchises on console… [setting it] free from serious competitive pressure”.
In response to the FTC’s suit, Microsoft and Activision claim (opens in new tab) that their merger, and specifically the acquisition of the Call of Duty franchise, “cannot upend a highly competitive industry”. “Giving consumers high-quality content in more ways and at lower prices is what the antitrust laws are supposed to promote, not prevent,” the response states. Microsoft has remained adamant that the acquisition is in the best interest of gamers so it's likely that this subpoena is designed to help the tech giant turn up evidence to support this particular argument.
This is hardly the first time in recent years that the FTC’s rulings have affected the video game industry. In December 2022, the regulatory body ordered Epic Games to not only pay a $275 million penalty for violating children’s privacy law but also to pay $245 million in refunds for users on the ground that they had been tricked “into making unwanted charges” (via FTC.gov (opens in new tab)).
The FTC has also scrutinized the use of loot boxes in games, and famously published a paper on the subject back in 2020 which “highlights public concerns [about] loot box marketing techniques that may encourage players to overspend or mask the real costs to players through confusing terms or inadequate disclosures” (via FTC.gov (opens in new tab)).
Though it is early days, the result of the FTC’s lawsuit against Microsoft, as well as whether or not the latter’s subpoena of Sony is upheld in court, will doubtless have a significant effect on the financial landscape of the video games industry.