Newly disclosed emails shed light on Microsoft, Sony’s negotiations over the future of Activision’s PlayStation

As part of Microsoft’s court battle with the US antitrust agency the Federal Trade Commission, emails between Xbox boss Phil Spencer and PlayStation head Jim Ryan have been revealed, outlining Microsoft’s initial proposal to Sony – about Activision Blizzard games it is willing to continue with The PlayStation platform should its $69bn acquisition be approved – and Ryan’s lengthy counter-proposal.

As Phil Spencer confirmed in September, Microsoft reached out to Sony shortly after the announcement in January of its proposed Activision Blizzard acquisition, providing a signed agreement with Sony that guarantees Call of Duty will remain on PlayStation – with feature and content parity – for “at least a few more. years beyond” Sony’s current contract.

During his FTC deposition this week, Ryan admitted he was “not particularly” happy with Microsoft’s original proposal, but was “hoping it was an opening salvo” — and now we have a more accurate picture of his initial response , thanks to the newly revealed emails. , as spotted by Tom Warren of The Verge. In a response dated May 26, Ryan informed Spencer that Microsoft’s proposal “did not accomplish” the goal of “ensuring Activision Blizzard games are available on PlayStation”, and that the company has ” serious concern” that a contained counter-proposal from Sony is intended to address.

Ryan then outlines “two key principles that are essential to mitigating the [acquisition’s] potential negative impact on players”.

“It is important to agree that all Activision titles will remain on PlayStation regardless of their original release date or whether they can be classified as part of a particular franchise, as they have historically been,” he continued. “And this commitment needs to be long-term, not just a few years after the acquisition.”

Ryan also insisted that a deal needs to be made to “address the way in which the games will be available. If Activision games are only made available on terms that are unfavorable for PlayStation compared to other platforms, it may be equivalent to not making them available. on the PlayStation indeed.”

As an example, Ryan wrote, “Making Activision games available on PlayStation after those games are available on Xbox would be contrary to the spirit of Microsoft’s commitment to keep Activision games on PlayStation, as well as it’s not fun for the players.”

“As long as you agree on the basic principle – Activision’s games should not receive unequal treatment of third-party subscription services – we are open to further discussion on the details of how to make this happen,” continued Ryan, adding “equal treatment of Bethesda games would be a logical topic for the parties to discuss as it involves some of the same concerns as the availability and/or unequal treatment of games by Activision”.

Ryan’s note to Spencer ended by asking Microsoft to confirm “these terms are acceptable as a framework for the parties to negotiate an appropriate written agreement”, and that an agreement will be prepared to do so.

Microsoft’s next major email, also revealed in the FTC case, came three months later, on August 26, 2022, when Xbox boss Phil Spencer reiterated that the Xbox company “wants find a way to maintain [Sony’s relationship as an important distributor of Activision content] once we close the Activision acquisition.” Spencer added that he would “continue to stand by” a written agreement in January that promised to “retain all existing Activision console titles with Sony, including versions on future in the Call fo Duty franchise or any other current Activision. franchise with Sony, until December 31st, 2027.”

Spencer reiterated that this would include content and feature parity, and promised that there would be no “timed-exclusive releases of such content on Xbox consoles.” However, he then added, “It is difficult to reconcile the principles set out in your email of May 26, 2022 with Sony’s leading role in the market. As I said before, we believe that keeping these titles in Sony, like we did with The Minecraft, is the right thing for the industry and the players”.

According to The Verge’s report of the trial this week, Spencer allegedly included a list of titles that would remain on PlayStation as part of his August email, but Ryan, during his deposition, said that the list is “not significant” and “represents a specific selection of older titles that will remain on PlayStation. For example, Overwatch is there but Overwatch 2 is not”.

At this point in the timeline, following Spencer’s email, talks seem to have begun to break down between Microsoft and Sony in a very public way. Spencer began openly discussing some aspects of its negotiations with Sony in the press, leading Ryan to call Microsoft’s first deal “inadequate on many levels”.

“I didn’t mean to comment on what I understood to be a private business discussion,” Ryan told GamesIndustry.biz at the time, “but I feel the need to set the record straight because Phil Spencer brought it up in a public forum” .

Since then, Sony has stood firm against Microsoft’s proposed acquisition of Activision Blizzard, even as more and more regulators around the world have begun to approve the deal. Currently, the UK’s CMA is the only regulator to block the takeover – a decision Microsoft will soon appeal – but the FTC has also expressed displeasure with the proposal.

Microsoft’s court battle with the FTC is set to continue this week as the antitrust agency tries to get an injunction to block the company’s Activision Blizzard deal ahead of its own internal deliberations. So expect more revelations as the proceedings continue.