Ctrl+Alt+Deceive: All The Dirt, Info, Lies, and LOLs We Found During FTC vs. Microsoft

[Heisenberg007]

Here are all the dirt, information, lies, and LOLs we found during the FTC hearing case.

Notes:

• That was a lot of work; I'd appreciate your support.
• Please keep it civil.
• This thread is very important because I wanted to compile all the information in one place for posterity and preservation of information.
• Please let me know if I missed any big stuff; I'll add it.

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SONY​

#1 — Jim Ryan doesn’t think Starfield’s exclusivity is anti-competitive​

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#2 — 1 million PlayStation players play only Call of Duty, and nothing else​

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#3 — Sony’s Call of Duty deals expires in 2024​

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#4 — Poorly redacted FTC docs revealed Sony’s game development budget​

TLOU 2 cost $220 million, while Horizon Forbidden West cost $212 million to develop.

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#5 — Poorly redacted docs show how much COD is worth to PlayStation​

• COD represents $800 million of PlayStation revenue in just the United States.
• PS players who play COD are responsible for $15.9 billion of annual PS revenue.

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#6 — Jim Ryan initially believed that MS’s ABK purchase wasn’t about PlayStation exclusivity​

Jim Ryan was “pretty sure” that COD would remain multiplatform.

Jim Ryan said that he initially believed that Microsoft’s ABK purchase wasn’t about PlayStation exclusivity and that an agreement could be reached.

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#7 — Jim Ryan said, “Publishers don’t like Game Pass.” Bobby Kottick agreed and also called Game Pass “value destructive.”​

Kottick said the same thing and used the same phrase, “value destructive,” when describing Game Pass.

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#8 — Sony’s internal data reveals that only 20% of PS5 owners own an Xbox in the US​

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#9 — Sony’s internal data reveals that nearly 50% of PS5 owners own a Nintendo Switch in the US​

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MICROSOFT​

#10 — Matt Booty’s internal email showed a will to “spend Sony out of business.”​

The email was sent in 2019. Microsoft disregarded that email as a “thought experiment.” However, since that email was sent, Microsoft has spent $80 billion dollars on acquiring multiplatform game developers and publishers.

He also discussed having a “moat of content” in the same email above, referring to Microsoft’s walled-garden approach.

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#11 — Microsoft made a list of 100+ developers and publishers for potential purchases​

Including SquareEnix, Sega, FromSoftware, CDPR, Ubisoft, Nintendo, and Sony!

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#12 — Microsoft narrowed down potential purchases to 17 targets​

Including HouseMarque, Bungie, and Sega.

In 2021, HouseMarque mentioned that they were approached by “the usual suspects” from China, Europe, and America.

This implies that these 17 targets were officially approached for an acquisition.

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#13 — Phil Spencer incorrectly denied reports of Japanese acquisitions​

In November 2021, a report leaked Microsoft’s attempt to acquire a Japanese publisher. Phil Spencer denied those reports when they were true.

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#14 — A Matt Booty email revealed that Microsoft did not want to put their games on other Cloud gaming services​

“No Effin’ Way,” said Matt Booty.

The email also shows Phil Spencer sending Nvidia an official notice to take down Xbox games.

Later, when regulators started cracking down on Activision’s acquisition, Microsoft offered deals to 5 cloud services.

It’s important to note that the CMA disregarded these deals (and blocked the acquisition), saying that these deals were just to get the acquisition cleared. It is safe to assume that they made their decision after reading that email.

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#15 — Phil Spencer had already decided in 2021 to make ALL Zenimax games exclusive​

This is despite reduced accountability margins.

Despite the decision already made, Phil Spencer continued saying that games will be decided “on a case-by-case basis,” including during the FTC hearing in the court.

Phil’s statement during the recent FTC hearing.

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#16 — Phil stopped Tim Stuart from publicly saying that all Zenimax games would be exclusive​

The above “conversation” that Phil is referring to is this interview by Tim Stuart at the Jeffries Interactive Entertainment Virtual Conference:

https://www.ign.com/articles/xbox-bethesda-first-better-best

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#17 — Phil Spencer lied in court about Elder Scrolls 6’s exclusivity​

FTC lawyers later read Phil’s prior deposition in which he confirmed that Elder Scrolls 6 had been internally confirmed as an exclusive.

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#18 — Microsoft wanted to make Minecraft Dungeons exclusive to Xbox​

Phil’s internal email, read in court, showed that he was “frustrated” that Minecraft Dungeons is multiplatform because of the original contract.

He asked his team to “find ways” to make it exclusive.

Xbox CMO emails Phil, “This [Minecraft Dungeons] should be exclusive.”

Phil replied, “I agree.”

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#19 — Phil Spencer on Xbox fans evangelizing xCloud​

​

Source: IGN

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#20 — Microsoft amended the contracts to make Indiana Jones exclusive​

The original contract between Disney and Bethesda included PlayStation, Xbox, and PC.

After Zenimax’s acquisition, Microsoft reached out to Disney, amended the contract, and made Indiana Jones exclusive to Xbox/PC and removed PlayStation.

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#21 — Microsoft has already considered making Activision games exclusive.​

In addition, the internal emails also revealed that Tim Stuart was working on an analysis model that measured how much revenue Activision would lose if we made ABK games exclusive and the potential increase in Xbox console sales and Game Pass subscribers needed to offset that revenue.

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#22 — Xbox missed its revenue target by over $780 million.​

Phil Spencer also confirmed that the Xbox division is not meeting its internal targets.



And the business is not strong.

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#23 — Phil Spencer proposed the idea of shutting down Xbox, in 2019.​

Also calls Xbox “Polaroid.”

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#24 — Of all consoles sold in 2021, Xbox had a 16% market share​

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#25 — Phil Spencer’s email on August 26, 2022, rang “alarm bells” for Jim Ryan​

Here is that complete email exchange between Jim Ryan and Phil Spencer.

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#26 — Phil Spencer offered Jim Ryan only old and select new games as part of the ABK agreement​

According to Jim Ryan, Phil Spencer sent a list of games that Microsoft would keep multiplatform after the acquisition, but that list was “inadequate” and only had “old games.”

According to Jim, Overwatch 1 was included in that list, but Overwatch 2 was not.

Source: The Verge

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#27 — Microsoft’s internal document shows they treat Cloud as a separate market​

This goes against their regulatory arguments that Cloud gaming is only a feature and not a separate market.

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#28 — Satya Nadella also called Cloud gaming a separate market​

From Satya Nadella’s testimony in court.

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#29 — Microsoft’s leadership discards Nintendo when looking at Xbox's success metrics​

FYI — SLT refers “Senior Leadership Team” that includes top executives such as Satya Nadella, Phil Spencer, Amy Hood, Tim Stuart, and Sarah Bond.

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#30 — Microsoft did no strategic or financial analysis before making the Nintendo COD deal​

Xbox CFO Tim Stuart confirmed this.



This was interesting because (1) Microsoft was advertising COD’s availability to 150+ million gamers, and (2) Microsoft told the courts that they select platforms and exclusivity of each title based on detailed strategic and financial analysis.

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#31 — Microsoft did not consult Activision before making the Nintendo/COD deal, Bobby Kottick revealed​

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#32 — Microsoft tried to buy “Zynga.” Take-Two purchased Zynga later.​

Phil Spencer said that they thought they need someone even bigger. That’s where Activision-Blizzard-King came into the picture.

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#33 — Microsoft agreed to 80/20 revenue splits for Call of Duty​

Instead of the usual 70% revenue, Microsoft agreed to give ABK 80% of revenue on every COD game sale on Xbox.

Microsoft did so because they thought it was “critical to get Call of Duty on Xbox.”

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#34 — Microsoft bought Ninja Theory for $117 million in 2018.​

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ACTIVISION-BLIZZARD-KING​

#35 — Kottick regrets not bringing COD to Switch​

https://www.theverge.com/e/23541088

After watching the prototype, Kottick didn’t think Nintendo Switch would be a big success. “I made a bad judgment,” Kottick said.

Kottick intends to change that and bring COD to Switch 2.

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#36 — Kottick is open to bringing COD to Switch and Cloud without Microsoft​

As long as the commercial terms make sense.

 

[BloodMod]

Stickied.

 

[Cool hand luke]

Excellent post. For the sake of accuracy, as I wasn't able to listen, did Kotick actually say GP was value destructive? The tweet implies it but doesn't attribute the words to him.

 

[Heisenberg007]

Excellent post. For the sake of accuracy, as I wasn't able to listen, did Kotick actually say GP was value destructive? The tweet implies it but doesn't attribute the words to him.

He did.

There was also this follow-up by the Judge who asked, "why are you selling ABK to Microsoft then if you do not agree with their business strategy?"

Kotick responded along the lines of that he has a responsibility to his shareholders to do what's best for them, and that it's okay to have a preference for different strategies.

Essentially, he said "it's Microsoft's problem once we have cashed out. They could burn it to the ground for all I care."

 

[Satoru]

@Heisenberg007 still reading, but FYI, you should screenshot the relevant stuff.

 

[Gods&Monsters]

Wow so much info in the OP! This needs to be sent to every journalists (outside of gaming if possible) because they didn't report half of it.

 

[thicc_girls_are_teh_best]

Nice summation of details revealed in the hearings, Heisenberg. For me, the biggest sticking points are #14, 15, 20, 22, 27 and 28.

#14: Shows that the CMA were 100% right in realizing the 10-year cloud deals were merely performative to try getting the deal passed. Just like how the "case-by-case" for Zenimax titles was performative, in hindsight.

#15: Again, shows that the "case-by-case" talk was performative and mainly for pro-consumer optics to clueless gamers and media/press. Also shows that MS have PLENTY of incentive to foreclose on all new ABK content off PlayStation even if it means leaving revenue & profits on the table. As long as it can contribute to "spending Sony out of business", MS can justify it since gaming revenue & profit means so little to their bottom line.

#20: Shows that Microsoft have no issue with reneging previously agreed-upon contracts for multiplatform games of acquired 3P assets & entities. Even, again, where it otherwise would not make sense for a company that actually needs the revenue of multiplatform sales of big IP properties in their gaming section in order to survive as a corporation.

Something that is absolutely not the case with Microsoft when it comes to their gaming division.

#22: This one's fascinating considering this is AFTER acquiring Zenimax. This is also after growth with both F'76 and ESO in particular during the same period. This goes to show how bad Xbox's upper management is; these weren't "extra perks" targets, just normal division revenue targets. Yet they still could not hit them.

And if this was down to Zenimax in particular not meeting targets, it just begs the question: would Zenimax have done better in revenue if they were still an independent 3P publisher? How are these 3P acquisitions good for industry growth when industry revenue flatness or declines can largely be attributed to a lagging Xbox division AFTER it's made these big 3P publisher acquisitions?

#27 & #28: These ones yet again reinforce the CMA's viewpoint in cloud being a distinct market; when the biggest company in cloud gaming has not one, but TWO high-level corporate members outright admitting cloud is a separate market, it doesn't matter if some Google executive thinks otherwise. Google aren't the ones with a successful cloud gaming or game subscription model, are they?

And there's a pretty obvious reason MS would view cloud as its own market: to them that means they can grow it aside from console gaming, a market where they've routinely lost to Sony and Nintendo. Meanwhile, they know mobile is dominated by Apple and Google for gaming; why would MS want to view cloud as an extension of markets where they don't dominate?

 

[Satoru]

After Zenimax’s acquisition, Microsoft reached out to Disney, amended the contract, and made Indiana Jones exclusive to Sony.

Slight mistake here mate.

 

[Heisenberg007]

Slight mistake here mate.

Fixed. Thanks!

 

[Satoru]

Very good investigative and indexing job mate, thank you for your work!

 

[Bryank75]

Excellent work @Heisenberg007 this will be incredibly useful when people need to look back and find details and facts of the case.

 

[Deleted member 417]

Excellent, Excellent OP. Appreciate the hard work and effort!

#23, where phil says he can't find one strategy to make Xbox win organically confirms, beyond doubt, that he should be fired. There are several ways for xbox to win organically. If Phil Spencer can't think of one, even amongst the thousands of suggestions from gaming forums, even after being in charge for 10+ years of the department, then he is not fit for that position.

 

[Heisenberg007]

Excellent work @Heisenberg007 this will be incredibly useful when people need to look back and find details and facts of the case.

Exactly. That was the idea behind the post.

This is extremely crucial information and should not be lost with time and within mega-threads.

 

[Heisenberg007]

Excellent, Excellent OP. Appreciate the hard work and effort!

#23, where phil says he can't find one strategy to make Xbox win organically confirms, beyond doubt, that he should be fired. There are several ways for xbox to win organically. If Phil Spencer can't think of one, even amongst the thousands of suggestions from gaming forums, even after being in charge for 10+ years of the department, then he is not fit for that position.

Thank you!

And to be fair, Phil is referring to an organic strategy for mobile gaming, not for Xbox.

 

[Cool hand luke]

Excellent, Excellent OP. Appreciate the hard work and effort!

#23, where phil says he can't find one strategy to make Xbox win organically confirms, beyond doubt, that he should be fired. There are several ways for xbox to win organically. If Phil Spencer can't think of one, even amongst the thousands of suggestions from gaming forums, even after being in charge for 10+ years of the department, then he is not fit for that position.

Until, of course, discussions escalated that year and they decided to try buying out the industry to squeeze out Sony. See exhibit #10.

 

[daniel5043]

Would the contract between mojang and Sony for Minecraft before Microsoft brought them be relevant

 

[Deleted member 417]

Thank you!

And to be fair, Phil is referring to an organic strategy for mobile gaming, not for Xbox.

Cheers for the correction. I still think Spencer should be removed but it does go to show that Xbox and Microsoft are still clout chasing. They wanted the hardcore, then the casuals, then the motion control crowd (granny gamer), then the living room and now PC. They need to stick to one market and focus on it, tie down their core and then expand.

Maybe Spencer should play a few games of 'Risk' before making his next decision

Until, of course, discussions escalated that year and they decided to try buying out the industry to squeeze out Sony. See exhibit #10.

I think that they think that by buying cloud, streaming and mobile, they will kill Sony as a bonus, not as a primary main objective

 

[Nhomnhom]

All this info and yet we still have no numbers on Xbox division and Gamepass profitability, they want to impose their business model on the industry by leveraging their massive size yet all the most basic info about their business model is kept completely secret.

At least we know that xCloud just costs them money.

Also, it's weird how Bobby does not seem that concerned with helping the deal pass, he either takes lying under oath more seriously than Phil or he just doesn't give a shit.

 

[Loy310]

Great work with this thread.

 

[Dr Bass]

Incredible post. and it just shows what a giant piece of dookie MS corporate is. Xbox needs to go!

@Heisenberg007 still reading, but FYI, you should screenshot the relevant stuff.

I agree. Twitter stuff could get pulled.