In the riveting showdown of FTC v. Microsoft, the second day of hearings brought forth a singular figure that held the audience captive: Phil Spencer, the formidable leader of Xbox. The chief executive took the stand to address Microsoft’s alleged defeat in the console wars, the cutthroat competition posed by Sony, and the daunting challenge of securing a position in a distant third place, where Xbox finds itself battling to stay afloat.
During his testimony, Spencer made a startling revelation, disclosing Microsoft’s consideration of acquiring Zynga to bolster its prospects in mobile gaming. Furthermore, the acquisition of Bethesda was motivated by the possibility of Sony securing exclusivity for Starfield. In a moment of paramount significance, Spencer solemnly pledged under oath that Microsoft would not withdraw Call of Duty from PlayStation. However, this promise became a source of frustration as Judge Jacqueline Scott Corley’s line of questioning and the ensuing heated exchanges between James Weingarten, the FTC’s lawyer, and Spencer unfolded.
To add to the intensity, Google made a last-minute, rushed appearance to discuss Stadia in a captivating testimony that concluded the eventful day. Without a doubt, it was an eventful and information-packed session. Let us delve deeper into the revelations of day two.
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A plea to shift the focus away from the Nintendo Switch marked the commencement of the day’s proceedings. The courtroom was sealed as Jamie Lawver, senior finance director at Xbox, delivered confidential testimony regarding Xbox’s financials. The contents of Lawver’s revelations to Judge Corley remain unknown, but they undoubtedly set the stage for Spencer’s appearance and his subsequent discourse on the Xbox platform and its relationship with the Nintendo Switch.
The FTC and Microsoft have locked horns over whether the Switch should be included in the definition of the console market. This debate has been raging for two days, with multiple filings submitted to the court. Microsoft advocates for the inclusion of the Switch, as it would secure their position in third place. The FTC, on the other hand, argues that within Microsoft, the competition and comparisons revolve around Xbox and PlayStation, not the Switch. To substantiate their stance, the FTC provided market analyses and metrics employed internally by Microsoft, emphasizing the “high performance” console market consisting solely of the PS5 and Xbox Series S/X consoles. As is often the case, the reality lies somewhere in the middle.
To visually highlight the disparities, the FTC presented consoles inside the courtroom on day two, underscoring the striking differences between the Switch, PS5, and Xbox Series X. Spencer commented on the aesthetics of the consoles hauled in by the FTC, stating, “The PS5 and Xbox Series X shipped at the same time… From a form factor, these two functionally look more equivalent.” While arguing that it is incorrect to dismiss Nintendo as a competitor, Spencer acknowledged the evident hardware differences, affirming that “The Switch was designed for people to take on the go… Whereas the gen 8 [Xbox One] consoles require that they’re plugged into the wall and don’t have a screen. Nintendo built a different platform.”
To strengthen the FTC’s position, Spencer faced relentless questioning regarding the frames per second (fps) support of the Xbox Series S/X consoles compared to the Switch, as well as disparities in GPU teraflops. At times, it felt as if the FTC was on the verge of summoning a PC gamer to the stand to testify about memory speeds, CPU cores, and thermal paste.
The reality remains that the Nintendo Switch is undeniably a game console. While it can play some of the same games as the Xbox Series S/X and PS5, its performance and visual fidelity often fall short. However, its catalog boasts immensely popular games like Fortnite, which do not conform to the traditional triple-A model. Moreover, Nintendo’s decades-long investment in a robust lineup of exclusive titles has solidified the Switch’s success, even without the inclusion of Call of Duty and the kind of triple-A games that typically drive consumers toward the PS5 and Xbox Series X.
If you are a gamer valued by both Microsoft and Sony, it is highly likely that you are also a prospective customer for the Switch. Ultimately, Sony, Microsoft, and Nintendo are all competing for your precious gaming time and undivided attention.
Interestingly, in the Epic v. Apple verdict, the court recognized the potential of the Switch as a future competitor to Apple and Google phones, albeit not in the present. Now, almost two years later, we find ourselves embroiled in another antitrust case, where the very definition of the Switch is being contested. Let us remind ourselves that, at its core, the Nintendo Switch is a game console. It is time to move forward.
Console wars and the uphill battle faced by Xbox occupied the spotlight before the FTC v. Microsoft hearing. Microsoft argued that “Xbox has lost the console wars, and its rivals are positioned to continue to dominate, including by leveraging exclusive content.” In a court filing, Microsoft asserted a 16 percent share of console sales in 2021, when considering the Switch, and a 21 percent share of the console install base.
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Hence, the crucial question posed by the FTC’s lawyer during the court session on Friday resonates deeply: “Has Microsoft lost the console wars?” In response, Spencer meticulously paused for ten seconds, acutely aware of the fervent debate raging within the Xbox and PlayStation communities.
“As the console wars represent a social construct within the community, I would never underestimate the passion of our fans,” Spencer cautiously replied. “If we analyze our market share in the console space over the past two decades, we undeniably occupy third place. We trail behind Sony and Nintendo in the global console share.”
In the grand scheme of the console wars, the verdict remains uncertain. Only time will reveal whether Xbox can successfully reclaim its footing in the race for console supremacy or whether it will forever remain consigned to the shadows of its rivals.
As the courtroom battle rages on, the gaming industry and its dedicated enthusiasts eagerly await the next chapter in this compelling saga. The console wars have yet to declare a definitive victor, and the future of Xbox hangs in the balance.