Early this week, it was discovered that several unredacted Microsoft emails and documents had been mistakenly published online last week. The files are from the FTC’s case against the company over its acquisition of major US game developer Activision Blizzard.
The basic gist of the news is that Microsoft still wants to be a monopolizing juggernaut … and is run by futurists who don’t know how to use a Sharpie.
Does Microsoft Dream of Acquisition Sheep?
Apparently, yes.
Regarding the monopolization: The leaked emails (the relevant ones involve Phil Spencer, CEO of Microsoft Gaming and head of the Xbox division) reveal a bunch of executive-level discussions from 2019 to 2022 about acquiring gaming companies. The companies include, among others, Valve (owner of Steam), Warner Bros. Games, and Nintendo.
(The last of whom, it should be remembered, Microsoft appeased vis-a-vis the acquisition of Activision Blizzard, by agreeing to keep Call of Duty available on the Switch; that may have also been a move intended to help Microsoft maintain good relations with a future merger partner.)
These discussions also included acquiring the rights to release third-party games on Xbox Game Pass on the same day that they’re released for the general audience (called “day-and-date (D&D) releases”). Doing so would increase Xbox profits, of course, by making Game Pass subscriptions more attractive to gamers. Less obviously, though, it would also increase Game Pass’ leverage within the gaming industry: as Game Pass gains greater reach within the audience, Microsoft will have a stronger hand to play against game developers who want to get their game to that audience.
The third-party games mentioned in the leaked emails include, among others, Baldur’s Gate 3 (whose popularity they vastly underestimated pre-release), Jedi: Survivor, and the Dark Souls series.
Microsoft’s Monopoly Strategy: Win
To me, the most interesting thing here is the trajectory of Microsoft’s market share in the gaming industry. People online are reacting to the news that Microsoft was considering acquiring Nintendo with ridicule; as though Nintendo is just too big and Microsoft was being ridiculous.
But Microsoft tried to monopolize software for personal computers back in the 1990s. And it’s hardly the only company to ever try its hand at monopolization — Standard Oil, AT&T; Google is in court for two major antitrust cases right now. Corporations repeatedly aim for consolidation, all across the history of modern capitalism; how else are they supposed to reliably increase profits, when competition with peers runs the risk of lowering prices or spurring potentially disruptive technological and/or economic change?
So it makes perfect sense that Microsoft would consider acquiring Nintendo. And put that together with its acquisitions of Obsidian in 2018, Bethesda-owner ZeniMax in 2021, and Activision Blizzard today? Well, why shouldn’t it seriously consider acquiring Nintendo?
We who have been born in and grown up in the age of the Mario, Zelda, and Pokemon franchises feel like Nintendo is a fact of life. But it’s really not. In the end, it’s just another company — and Microsoft is just another aspiring monopoly.
Accidental Corporate Transparency — “But I Repeat Myself.”
As for the noble, yet failed efforts at Microsoft to redact documents properly: Basically, the court which is hearing the FTC case against Microsoft’s acquisition of Activision Blizzard, asked Microsoft and the FTC to provide redacted versions of the documents which they’re using as exhibits in the case. The court, being that it’s operating in a nominally democratic society, published these documents for public transparency. But Microsoft didn’t redact their documents properly, hence the leak.
This actually already happened once before in this same FTC case, with a Sony document that revealed a bunch of usership and revenue statistics for, among other things, the centerpiece of the case: Call of Duty. And it happened back in 2014 with the Edward Snowden leaks: the established news outlets that were given the documents tried and failed to redact some of the documents they published.
I’d say it’s funny how the ‘experts’ are actually useless, but that would require finding the rich and powerful more funny (which, don’t get me wrong, they are) than contemptible. An especially difficult task when they’re keeping information from the public that affects our lives and the society we all share.
Console Futurism, Internet Age
Finally, regarding Microsoft’s console futurism for the Xbox. According to the leaked documents, the company plans to release a cylindrical, disc-less, 2TB Xbox Series X in November 2024; alongside it will be a new lift-to-wake controller with upgraded haptics specs and direct-to-cloud connectivity. Additionally, the documents revealed potential releases of a one-handed controller, a controller for phones, and a gaming keyboard and mouse.
My main takeaway from this is that Microsoft is unwilling to innovate away from what it knows. Even as the Internet becomes the favored way of gaming — and companies both exploit and feed that process, as with Sony’s release of the disc-less PS5 Digital Edition — the most they’re willing to do is imagine semi–out-there ways to integrate the cloud with the Xbox by 2028.
This fits the historical pattern of capitalist ‘innovation’: private money is rarely ever willing to initiate more-than-slightly path-breaking technological or organizational changes. The government has always funded the initial stages — the ones that discover new (though not necessarily to everyone) ideas and inventions, and test their basic feasibility.
Corporations are happier taking that money and doing the experiments, thus profiting and taking on little-to-no risk; and they’re even more happy to patent and otherwise use these publicly funded innovations to make yet more money. And all the while, they propagate the lie that capitalists are innovator-kings.
Console Wars: Microsoft VS Sony
Also, Microsoft execs thought (right after its unveiling in March 2020) that the PS5 was basically going to be garbage compared to the Xbox Series X. “30% advantage on GPU performance and a 25% memory bandwidth advantage”, one email reads. This certainly seems ridiculous now, given how well the PS5 is doing; with over 40 million units sold, it has almost exceeded total PS4 sales — and Marvel’s Spider-Man 2 hasn’t even come out yet.
But consider Microsoft’s aforementioned acquisitions, acquisition dreams, and desire to increase the profits and intra-industry leverage of Xbox Game Pass with D&D releases. PlayStation-developer Sony has been a big player in the opposition to Microsoft’s Activision Blizzard acquisition.
Taken together, it seems distinctly possible that Microsoft execs’ early take on the PS5 was a textbook example of motivated reasoning. They optimistically assumed that the Xbox Series X would outperform the PS5 by a wide margin because such an event would weaken the position of a major competitor (i.e. Sony) relative to Microsoft’s own position; and this would serve their goal: monopolizing the gaming industry.
Major Takeaways
To summarize the main takeaways from this sort of unprecedented leak:
- The leak was Microsoft’s fault.
- Microsoft considering acquiring Nintendo isn’t as surprising, nor would the acquisition itself be as impossible, as some are making it out to be.
- Microsoft still really wants to win the console wars, even as gaming is shifting to be mostly Internet-based.
- And related to the last point, Microsoft vastly overestimated how much better the Xbox Series X would be than the PS5.
And despite the aforementioned history of leaks, it is still somewhat unprecedented. Corporations aren’t democratic entities, not even nominally like the US government; despite their power, transparency isn’t expected of them (except for major shareholders — but not for the general public). The gaming industry is no exception. “Review embargoes, tightly controlled press engagement, NDAs for workers, and systemic silence surrounding certain events are all considered normal.”
So enjoy this brief respite while it lasts. Chances are: 1) someone at Microsoft is getting fired; 2) another company memo will be going out to not-all-that-subtly warn people away from leaking, intentionally or unintentionally through carelessness; and 3) we’ll hear Phil Spencer reiterate a couple more times that what was leaked are not the “real plans”.
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