FTC v. Microsoft: all the news from the big Xbox courtroom battle

Microsoft is heading to court on June 22nd to face the Federal Trade Commission in a five day case that will determine the future of its $68.7 billion proposed acquisition of Activision Blizzard. The FTC wants a preliminary injunction granted to prevent Microsoft from closing its deal ahead of a separate legal challenge that’s due to commence on August 2nd.

The stakes are high. Microsoft has until July 18th to try and close its proposed acquisition; otherwise, it has to pay $3 billion in breakup fees to Activision Blizzard or renegotiate new terms. The FTC isn’t the only regulator trying to block this deal from happening, either. The UK’s Competition and Markets Authority (CMA) decided to block the deal in April, and Microsoft is currently appealing that decision in a case that will commence in late July.

If you missed the first day of FTC v. Microsoft you can catch up on testimony from Xbox Game Studios chief Matt Booty and that bombshell Sony email right here. Day two saw Xbox chief Phil Spencer take the stand in hours of testimony that covered Microsoft’s competition with Sony, Microsoft looking at buying Zynga to improve its mobile gaming prospects, and that Microsoft acquired Bethesda after learning that Starfield might become a PlayStation exclusive. You can catch the full day two summary right here.

Day three included testimony from Sony’s PlayStation chief Jim Ryan, an Nvidia executive, and economic experts for the FTC and Microsoft. We got to hear more about that bombshell email, Sony’s thoughts on Game Pass, and some inside baseball on the contract negotiations between Sony and Microsoft over Call of Duty. You can read the day three summary here.

Day four was the big one. Activision CEO Bobby Kotick took the stand to discuss Call of Duty on Switch and the history of Activision. Microsoft CEO Satya Nadella then appeared in the afternoon to answer questions on Microsoft’s cloud ambitions and why he would love to get rid of console exclusives if he could. We also heard from Nvidia’s Jeff Fisher briefly and Microsoft’s economics expert, Dr. Dennis Carlton.

Day five is starting today and it’s the final part of the hearing. We’re going to hear from Xbox CFO Tim Stuart, Microsoft CFO Amy Hood (mostly by written declaration), and Steve Singer, SVP of developer relations at Nintendo, by video deposition.

Follow along for all our coverage from inside Microsoft’s big Xbox courtroom battle.

• ‘Dump trucks of money.’

  The FTC brings up the phrase “dump trucks of money,” as it’s questioning Tim Stuart about Microsoft spending lots of money on gaming content.

  FTC: Have you ever heard the amount of money that’s been spent? Like you’ve said, dump trucks of money?

  Stuart: I have a friend of work that likes to say dump trucks of money. I referred to him.

• 

  TODAY, 11 minutes ago

  Tom Warren

  We won’t get to hear from Nintendo today.

  Steve Singer, SVP of developer relations at Nintendo, is appearing in court by video deposition. As the video contains lots of confidential information Judge Corley will view it in closed court.

  Nintendo has been at the center of an ongoing battle about whether the Switch is competition to the Xbox and PlayStation.

  Microsoft also signed a deal with Nintendo to bring Call of Duty to the Nintendo Switch if the Activision deal closes. We learned yesterday that this would also include a future Nintendo console, so it’s a shame we won’t hear more about Call of Duty on Switch today.

  

  Photo by Amelia Holowaty Krales / The Verge
• 

  TODAY, 12 minutes ago

  Tom Warren

  Xbox console market share time.

  The FTC is questioning Tim Stuart about console market share from April 2022. A confidential document share excludes Nintendo Switch and Xbox One / PS4 consoles. It also measures just the US alone. Tim Stuart is asked about Japanese markets, as the data doesn’t include these markets. “The data is not that reliable,” for other markets, argues Stuart.

• 

  TODAY, 16 minutes ago

  Tom Warren

  Project Denali.

  We’ve seen references to Project Denali in the exhibits list, and now the FTC begins by questioning Tim Stuart, Xbox CFO, who confirms Project Denali is the codename for the Activision Blizzard deal.

  The FTC continues to question Stuart around whether his team has done any financial analysis on the Sony agreement for Call of Duty or the Nintendo and Nvidia + other cloud deals. Stuart confirms they have not done financial analysis of the effects of the deals.

• 

  TODAY, 21 minutes ago

  Tom Warren

  The CMA tried and failed to push Microsoft’s UK appeal back.

  The Competitions and Markets Authority (CMA) in the UK filed to try and delay Microsoft’s appeal of its Activision Blizzard acquisition decision yesterday. The Competition Appeal Tribunal (CAT) immediately responded with a no, so the hearing will continue on July 28th. The CMA was trying to push it all the way back to October, and the CAT ruled this would be “contrary to justice and fairness.” The timing comes curiously right in the middle of this FTC case.
• 

  TODAY, 23 minutes ago

  Tom Warren

  Xbox CFO Tim Stuart is taking the stand.

  We’ve heard Tim Stuart referenced in a lot of internal emails over this five-day hearing and now we’re going to get to hear from him directly. The Xbox CFO is responsible for managing the finances of Microsoft’s gaming business, so expect to hear a lot of questions around the business side and perhaps why Microsoft is increasing Xbox Game Pass prices.

  

  Xbox CFO Tim Stuart.Image: Tim Stuart (LinkedIn)
• 

  TODAY, 24 minutes ago

  Tom Warren

  Microsoft CFO Amy Hood is not taking the stand.

  The FTC has decided not to question Amy Hood, Microsoft’s CFO.

  Microsoft has already submitted a written declaration for Hood where she says Microsoft wants to increase Xbox operating margins to match other Microsoft businesses. She also says Microsoft never assessed removing Call of Duty from PlayStation and that the Activision deal has to immediately make money.