Microsoft claims Sony pays for ‘blocking rights’ to keep games out of Xbox Game Pass

Microsoft has claimed that Sony pays for “blocking rights” to stop developers from adding their content to Xbox Game Pass. The explosive claims are part of documents (Word doc) filed with Brazil’s national competition regulator and part of a review of Microsoft’s acquisition of Activision Blizzard.

“Microsoft’s ability to continue expanding Game Pass has been hampered by Sony’s desire to prevent such growth,” Microsoft claims in an Aug. 9 filing with the Administrative Council for Economic Defense (CADE), translated from Portuguese. “Sony pays for ‘blocking rights’ to prevent developers from adding content to Game Pass and other competing subscription services.”

Does this mean that Sony is evil and Microsoft is accidentally uncovering some nefarious business practices? The reality is likely to be a bit more complicated on both sides. Sony may simply pay for exclusive rights to its own streaming services, or it may have clauses in some publishing contracts that prevent some games it publishes from being published on rival subscription services.

Illustration by Alex Castro / The Verge

It’s not clear exactly what Microsoft is referring to here, but game publishing contracts can be complex, especially when rights to streaming and subscription services are involved. Documents filed in Epic Games vs. Apple The lawsuit last year revealed that Microsoft had considered reducing revenue sharing for PC games “in exchange for giving Microsoft streaming rights.”

If Microsoft had gone ahead with its plans, it could have led to it securing exclusive streaming rights for some games, preventing them from being available on rival streaming services. It all depends on how the publishing contracts are written, and Microsoft and Sony regularly secure game franchises that include timed releases, console exclusivity and lots of marketing dollars.

Microsoft is trying to convince Brazil’s CADE regulator that it should give up on the company’s proposed $68.7 billion acquisition of Activision Blizzard. While the Federal Trade Commission (FTC) is reviewing documents from Microsoft about its US acquisition, this correspondence is private. That’s not the case in Brazil, where its competition regulator is making public documents that offer a unique insight into the business competition between Microsoft and Sony.

Image: Microsoft

Documents from Brazil’s CADE have been pored over by Xbox and PlayStation fans over the past week, with posters on ResetEra highlighting the juicy bits. The regulator has questioned Sony and other Microsoft rivals about the Activision Blizzard acquisition. Sony previously responded to Brazil’s regulator by claiming it would be difficult for other developers to create a franchise that rivaled Activision’s Call of Duty and that it stands out “as a gaming category of its own”.

Of course, Microsoft disagrees, and Ubisoft, Riot Games, Bandai Namco, and Google have all highlighted the competition for Call of Duty in the form of Apex Legends, Battlefield, PUBGand more.

Microsoft also claims that the addition of Activision Blizzard content to Xbox Game Pass will increase the competition somewhat. “The inclusion of Activision Blizzard’s content in Game Pass does not harm the ability of other players to compete in the digital game distribution market,” Microsoft claims in a document, where the company also argues that it increases competition thanks to “high-quality content. with lower immediate costs.”

Sony has yet to respond to this particular point, but at $9.99 per month for Xbox Game Pass, it’s easy to imagine consumers opting for that option to play titles like Call of Duty instead of paying $60 or more to buy and own the game.

Image: Activision

Microsoft also argues that not distributing games like Call of Duty on rival console stores “simply wouldn’t be profitable” for the company. Microsoft has previously made it clear that it will continue Call of Duty on PlayStation. Microsoft says a strategy of not distributing Activision Blizzard games on rival consoles would only be profitable if the games could attract a large number of players to the Xbox ecosystem, resulting in revenue to offset losses from not selling those titles on rival consoles .

If Microsoft’s claims of “blocking rights” are correct, it wouldn’t be the first time Sony has used financial incentives to block game developers. Sony throttled PS4 cross-platform play for years and applied a portion of the associated revenue to publishers who wanted to enable cross-play in their games.

Sony’s cross-platform revenue sharing forced publishers to pay Sony a royalty whenever PlayStation players contributed more than a certain percentage to a cross-platform game’s bottom line for ” made up for the decrease in revenue” from Sony enabling cross-play. Epic Games CEO Tim Sweeney testified last year that Sony was the only platform holder seeking this cross-play compensation.

We’ve reached out to Sony for comment on Microsoft’s claims and to Microsoft to clarify what Sony is allegedly blocking. We haven’t heard from either company yet, and we don’t expect either to comment on these explosive details. But we’ll be watching the documents from Brazil’s CADE carefully in the coming days to see if and how Sony responds to Microsoft’s claims.