Newly Revealed Emails Shed Light On Microsoft, Sony Negotiations Over Activision's PlayStation Future

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As part of Microsoft’s court battle with 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 – regarding the Activision Blizzard games it would be willing to keep on the PlayStation platform should its $69bn acquisition be approved – and Ryan’s lengthy counter-proposal.

As confirmed by Phil Spencer last September, Microsoft contacted Sony shortly after the January announcement of its proposed Activision Blizzard acquisition, providing a signed agreement to Sony guaranteeing Call of Duty would remain on PlayStation – with feature and content parity – for “at least several more years beyond” Sony current contract.

During his FTC deposition this week, Ryan admitted he “wasn’t particularly” happy with Microsoft’s original proposal, but “hoped it was an opening salvo” – and we now have a more precise picture of his initial response, thanks to newly revealed emails, as spotted by The Verge’s Tom Warren. In a reply dated 26th May, Ryan informed Spencer that Microsoft’s proposal “did not fulfil” the objective of “ensuring Activision Blizzard games are available on PlayStation”, and that the company had “serious concerns” which an enclosed counter-proposal from Sony was intended to address.

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Ryan then outlined “two fundamental principles that are critical to mitigating the [acquisition’s] potential negative impact to gamers”.

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

Ryan also insisted an agreement must be made to “address the manner in which the games will be available. If Activision games are made available only on terms that are disadvantageous for PlayStation in comparison with other platforms, this could be tantamount to not making them available on PlayStation at all.”

As an example, Ryan wrote, “Making Activision games available on PlayStation after those games have been made available on Xbox would be contrary to the sprit of Microsoft’s commitment to keep Activision games on PlayStation, as well as unsatisfactory for gamers.”

“As long as you agree to the fundamental principle – Activision games should not receive unequal treatment on the parties’ subscription services – we are open to further discussing the details of how this might be accomplished,” Ryan continued, adding “the equal treatment of Bethesda games would be a logical subject for the parties to discuss because it involves some of the same concerns as the availability and/or unequal treatment of Activision games”.

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

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

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

As per The Verge’s report of this week’s trial, Spencer is said to have included a list of titles that would remain on PlayStation as part of his August email, but Ryan, during his deposition, said the list was “not meaningful” and “represented a particular selection of older titles that would remain on PlayStation. For example Overwatch is on there but Overwatch 2 is not”.

It’s at this point in the timeline, following Spencer’s email, that talks seemingly began to break down between Microsoft and Sony in a very public manner. Spencer began openly discussing certain aspects of its Sony negotiations with press, causing Ryan to call Microsoft’s initial deal “inadequate on many levels”.

“I hadn’t intended 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 this into the public forum”.

Since then, Sony has stood staunchly against Microsoft’s proposed acquisition of Activision Blizzard, even as more and more regulators around the world began approving the deal. Currently, the UK’s CMA is the only regulator to have blocked the acquisition – a decision Microsoft will soon appeal – but the FTC has also expressed its displeasure at proposal.

Microsoft’s court battle with the FTC is set to continue into this week as the antitrust agency attempts to secure an injunction to block the company’s Activision Blizzard deal ahead of its own internal deliberations. So expect further reveals as proceedings continue.