Why it matters: Another day, another private email revealed in open court. The thing about getting sued is that nothing pertaining to the lawsuit remains hidden. Just ask Microsoft. Over the last few days, the FTC has paraded internal communications that paint a disingenuous picture of the company's Call of Duty concessions.
Microsoft has endured several international regulatory challenges in trying to close its record-breaking $70 billion acquisition of Activision Blizzard. The latest challenger, the US Federal Trade Commission (FTC), is attempting to poke holes in Microsoft's attempts at making concessions to allow the deal to go through.
The primary objection in past regulatory hearings has been that if the deal was allowed to go through, Microsoft could make Call of Duty exclusive to Xbox, creating an unfair advantage primarily against Sony, the merger's most vocal opponent. Redmond agreed to keep CoD development status quo for at least 10 years to quell these concerns. This concession satisfied most officials outside of the US, but the FTC seems less satisfied.
Last week, Microsoft got to trot out internal Sony memos indicating that its rival didn't care about CoD exclusivity – that Sony's complaints were just noise to attempt to break the deal. This notion has been quite apparent to anyone paying attention to the proceedings. Microsoft has essentially conceded that it has lost the current-generation console wars, so making CoD exclusive will barely dent Sony's bottom line.
However, Microsoft's promise to continue developing CoD on other platforms seems contrary to what the company initially planned and what it has done with past acquisitions. The FTC pointed out that even the top management at Bethesda was confused about Redmond's "special treatment" of Activision.
Bethesda Senior Vice President of Marketing and Communications Pete Hines emailed other company heads, including Todd Howard, Todd Vaughn, and Jamie Leder, expressing his confusion about why Microsoft is allowing Activision to continue developing for PlayStation. Hines did not see any difference between the Zenimax and Activision deals.
Feb '22 email from Bethesda exec Pete Hines suggests frustration at Xbox/PC-centric strategy for team's games.– Stephen Totilo (@stephentotilo) June 26, 2023
Reacting to public vow to keep Call of Duty on PlayStation: "I'm confused, is the below not the opposite of what we were just asked (told) to do with our own titles?" pic.twitter.com/N6S8IqBxbH
"I'm confused," Hines said, referencing a 2022 Microsoft blog post assuring fans that Activision would continue releasing CoD on PlayStation. "Is [this] not the opposite of what we were just asked (told) to do with our own titles? What's the difference? Why [is it] ok for COD or any Activision Blizzard games, but not TES6 or Starfield?"
Indeed. Bethesda fans in the PlayStation camp were just as disappointed that they wouldn't have access to TES6 or Starfield as they would be if they were to lose Call of Duty. Microsoft's defense of its actions is that CoD is somehow bigger or more important than Bethesda's "mid-sized" titles.
Confusion and frustration at Microsoft's complete removal of an entire demographic from Bethesda's sales opportunities also seem apparent. Starfield and The Elder Scrolls VI are arguably the most highly anticipated titles in the company's history. Being told it had to forego producing them for a sizable PlayStation crowd probably cut to the bone despite the issue undoubtedly being argued in Zenimax's negotiations to merge with the Windows giant.
The real question is: Is Microsoft's disingenuous motives behind its CoD concession and the conflict between how it handles this acquisition and those of the past enough to kill the deal? Probably not.
Even if Redmond made CoD exclusive, there are still a ton of developers out there that can fill a void left by the absence of the franchise on PlayStation. Whether or not these replacements could equally compete with the king of first-person war-time shooters is irrelevant. The fact that they can compete at all suggests that Microsoft is not exercising monopoly control.