Phil Spencer: "Nintendo future exists off their own hardware"

[EpicRandy]

Shatts said:

EpicRandy said:

FTC - 

• Yes, and CoD going exclusive has been judged a non-issue by literally every other authority and the judgment in the FTC court case. that's the weak argument that relied upon, amongst other things, a market definition excluding Nintendo.

CMA -

• The use of "cloud market" was always bogus. The market was never big enough so MS would want to save it over a $70B transaction and so would pretty much be ready for any concession there from the start. The concession that the EU got because they engaged in good faith with MS to resolve any issue.
•  There is no difference in content in the cloud market than other markets making MS early lead only because they made an early and serious push for it and only sustained by other actors' unwillingness to add cloud options and not because of any bindings holds or monopolistic practice from MS.
• Also, the market was badly defined by the CMA which led to a paradox in their conclusion of the impact of the transaction. Here are some thoughts I already made from the link I shared earlier :

The CMA found no issue with digital stores, likewise, they found no issue with multi-game subscription providers. But by their definition, they have an issue if an actor does or adds a cloud streaming feature. There's a paradox here. The CMA has taken issue because the remedies MS proposed only catered to BYOG business as they would have wanted to also support cloud providers with multi-game subscription models and others but again they found no issue with said business models if they don't propose a cloud feature.

This paradox makes it impossible for MS to propose actual remedies without having them address other markets outside the scope of the actual cloud market. In other words, by wanting MS to propose remedies to cloud providers with multi-game subscription services they are not actually benefiting the cloud aspect of those providers but the multi-game subscription one.

Let's say as a thought experiment, that the CMA did succeed and made MS commit to remedies for every business model of cloud providers there can be. What would prevent Epic Store, an actor judged not at risk by the CMA, to add a cloud streaming feature and claim the benefits of MS remedies? Likewise, if the CMA succeeded in forcing MS to license ABK titles to an actual cloud provider with a multi-game subscription service like Luna, what prevent Amazon from dropping Cloud streaming feature afterward or adding a download and install feature?

Windows - 

• is not about Xbox
• overall usage was 90% 10 years ago and it's now 70% and declining (quite the opposite of what you would see in case of an entity exerting policy to create/sustain a monopoly)
• Gaming market shares making a monopoly out of Windows OS are again artificially limiting themselves to PC gaming overlooking mobile and console gaming which all feature different OS.
• even if we limit ourselves to PC gaming, the high share is only fueled by users and content creators' general overlook of alternatives, not any policy set by Microsoft to keep the status quo or other. Take the popular multiple Genshin impact, for instance, it's popular enough to be on pretty much everything, and they also have the resources to do so. Yet where is the macOS version, where is the Linux version? Can you point to any MS policy preventing its developers from supporting those? Dota2 and Csgo, the ever top 2 top-played Steam games both support OSX and Linux, and yet users still play them predominantly on Windows. Can you point to any MS policy preventing gamers from playing those on anything other than Windows?

-As a practical matter, a market share of greater than fifty percent has been necessary for courts to find the existence of monopoly power

*Can be* that's all depends on how a company is acting, Nvidia has a greater share of the GPU market than MS on the OS market and it's not a monopoly.

-If big companies like Microsoft can acquire huge third parties like Activision Blizzard and make them exclusive, then how are smaller companies supposed to compete directly? This doesn't create competition.

By continuing to do what they are, it's not without reason EA and many others went public stating how this transaction changed nothing for them. Having CoD under MS does nothing to lessen Ubisoft's Assassin Creeds fanbase or appeals nor it does for any other franchises. This is content creation with each product being unique not some factory producing a commodity X so cheap others cannot match their output and pricing.

- Anti-competitive practices are business or government practices that prevent or reduce competition in a market. Antitrust laws ensure businesses do not engage in competitive practices that harm other, usually smaller, businesses or consumers.

Yes, and this transaction has been judged not to create any of this by dozens of market authorities and has been ruled not at risk to do so when court challenged.

-Obviously market authorities from other countries don't care cuz Activision Blizzard and consoles are only big in certain countries. They don't see the impact.

Convenient when market authorities don't challenge, it's because they don't care, when they do and fail, it's because they're incompetent. Sony also did not saw the impacts or did not care when Jim Ryan wrote the infamous email apparently.

Of course, the vast majority of market authorities are the ones being blinded and very few that just so happen to have shown great desire to challenge big-tech whenever they can are supposed to be the ones seeing straight through things here, even though they make a joke of their case when they try to challenge it.

I guess any argument will fit if it means it can be an alternative to the more logical conclusion that this transaction simply does not rise to anything anti-competitive or monopolistic.

Well my point was that Microsoft isn't just about Xbox consoles. They have multiple segments such as their PC operating system and cloud service that benefits from gaming content. No other company has a big share in 3 platforms in the gaming space. Steam is only big on PC, Nintendo Handheld, Sony consoles, even Apple and Google doesn't have anything close to what Microsoft has. People talk about how Microsoft's gaming revenue is lower than its competitor, but that doesn't mean it's significantly lower. Sometimes it's even above Nintendo's. Most importantly, it doesn't include the revenue that benefits from PC users using Windows. 

I was baffled with how incompetent FTC was, not only they failed to mention the fact that Microsoft has other platforms and services that benefits with this acquisition, they limited the discussion to "high-end consoles" for whatever reason. Both CMA and FTC are way too obsessed with CoD, when Activision Blizzard is more than just CoD. It makes sense why, because Call of Duty is constantly one of the biggest games on Playstation. Since they limited the discussion to "high-end consoles" CoD is the main topic. I understand, Sony is the big competitor, they would suffer a lot from this acquisition. However, if you think just a tiny bit, Activision Blizzard is a third party that has huge presence in every platform for gaming. King for mobile, Blizzard for PC, Activision for consoles/pc/mobile. Combined with Microsoft's market presence, you don't need to be Einstein to understand the potential threat to the market share. Microsoft already has lots of capable studios and assets including Bethesda and fcking Minecraft man. 

This discussion shouldn't be about consoles, it should've been the whole video game market. Phil Spencer said multiple times their focus is on mobile too. There's a new law that will allow mobile users to use third party stores. Perhaps Microsoft would aim there as well. With this leak, it was revealed they are(were) also interested in Valve and Nintendo. They clearly don't give af about competition, they just want to be market leaders through the power of money. This is seen with the Xbox plan to be market leaders by 2030. Remember, Microsoft is a gigantic company, gaming isn't even 20% of their whole revenue. They already have plenty of gaming market share, why should they become leaders in that market too? At the very least, Activision Blizzard should be their last acquisition in the gaming space, but you know they won't stop here. 

PC gaming to Windows revenue is an extremely weak link, it's not because PC gaming is almost exclusive to Windows that MS still dominates PC OS, it's because Windows still dominate PC OS that user and developers often disregard other OS as gaming choice. If you were to block such transactions on this you would not protect the gaming market, you would only try to punish MS for their High OS share without actually making a case related to the OS market which is DoA in any court case. If regulators think MS OS share is an issue by all means they should go and challenge MS on that exactly.

Steam is only big on PC

Steam never tried to push anywhere else either

even Apple and Google doesn't have anything close to what Microsoft has

Lol, yes they do, and they also generate way more profits out of similar revenue

from 2021 

However, if you think just a tiny bit, Activision Blizzard is a third party that has huge presence in every platform for gaming. King for mobile, Blizzard for PC, Activision for consoles/pc/mobile. Combined with Microsoft's market presence, you don't need to be Einstein to understand the potential threat to the market share.

King has been mentioned to be worth up to $50b in this transaction alone. So what? Microsoft has virtually 0 presence in mobile so that market is not at risk of anything.

You seem to mix efforts to increase market share/revenue and threats to competitiveness together. It does not matter if MS moves up the ranks in terms of share/revenue, authorities are not there to protect a specific ranking. All that matters is the market is still able to compete afterward. And on that, All 3rd parties that voiced their opinion on this said a resounding yes. Sony even said the same in internal emails but then proceeded to say no to regulators. yet the facts are this transaction changes nothing for any other ability to compete, it does not:

• Make fans of other franchises disappear or change in any way
• inhibit the ability for any other player to create and release new games for any platform and build/sustain their fanbase
• prevent any other players from making other acquisitions of their own
• prevent any other players from bolstering their offering in any way

This discussion shouldn't be about consoles, it should've been the whole video game market.

All markets that constitute the greater video game market Console have been looked at, all those were deemed not at risk by all market authorities including the CMA. the only exception was (the cloud market (CMA, EU, FTC) and console Market (FTC)). The EU fixed the issue it found in the cloud market with remedies from MS, the FTC console and cloud arguments were Judged insufficient, the console argument even triggered comments from the judge stating that the FTC is not supposed to protect market leaders but consumers, and the CMA finally got to negotiating with MS for resolutions once they found themselves the last man standing.

With this leak, it was revealed they are(were) also interested in Valve and Nintendo

What do you mean by revealed? It's not like it's supposed to be surprising or anything or expected to be any different from any other player. Both Valve and Nintendo are valuable companies is it supposed to be bad or ill-intended to value them? Quite the contrary IMO, it would be very arrogant/delusional not to value them.

They clearly don't give af about competition, they just want to be market leaders through the power of money. This is seen with the Xbox plan to be market leaders by 2030.

Yep, you clearly are confusing market ranking and market competitiveness. So Sony is the current Console market leader, is that supposed to be bad? Tencent is the current global market leader by revenue, is that supposed to be bad? Now because MS tries to best their competitor for the top spot it's supposed to spell doom? It's a market, competitors are supposed to try and best each other. It's like you expect a good guy chess player to let competitors beat him and if he tries to actively seek to win is not a good guy anymore. Being pro-competitiveness isn't supposed to be defined by your will or not to seek the top spot but by your respect for other players and the playing field that enables anyone to try and thrive.

Remember, Microsoft is a gigantic company, gaming isn't even 20% of their whole revenue.

So? MS's size certainly increased the amount of scrutiny they got from regulators but in the end, size does not matter only the impact in relevant markets.

They already have plenty of gaming market share, why should they become leaders in that market too?

Why not? should they not always try to compete better? Sony has even more share is it too much? should they give those away because they should be happy with less, the likes MS has now?  Why should this market have special rules or be viewed through some weird lens that protects the status quo as the right thing and normal free market behavior as bad or evil?

At the very least, Activision Blizzard should be their last acquisition in the gaming space, but you know they won't stop here. 

I don't expect them to stop, but if you look at how ABK played out it's not like we can expect this transaction scale to be frequent either. It was ABK who went to MS to be bought, after all, not MS seeking them out or trying to do a hostile takeover.

There's also the fact that MS wants to bolster GamePass first and foremost and it's not like they can expect an ever linear growth with acquisitions. There's a point where adding more content would not really raise the appeal anymore. With that in mind, I don't expect MS to fund such acquisitions forever without getting/analyzing the ROI of both Zenimax and ABK transactions over many years. 

That said what if EA comes knocking looking to be bought just like ABK did? Do you expect MS to simply say no I'm satisfied? Of course not.

So all things considered I do not expect MS to actively seek any such large acquisitions from now on but of course, when a rare opportunity presents itself I don't expect them to turn it down on the spot. At the same time, I do expect them to remain actively seeking more targeted acquisitions able to fulfill some lacking output for Xbox like studio making games in genres they don't already cover. 

Last edited by EpicRandy - on 21 September 2023