Microsoft claims Sony pays for ‘blocking rights’ to keep games off 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 hindered by Sony’s desire to block such growth,” Microsoft says 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 bad and Microsoft casually in the future revealing some dastardly business practices? The reality is probably a bit more complicated on both sides. Sony could be paying for exclusive rights to its own streaming services, or it could have clauses in some publishing contracts that prevent some games it publishes from being published on rival subscription services.

The Xbox X logo in a circle against a dark background with green lines.

Microsoft has been focusing more on Xbox Game Pass in recent years.
Illustration by Alex Castro / The Verge

It’s unclear exactly what Microsoft is referring to here, but contracts for publishing games can be complicated, especially when streaming rights and subscription services are involved. Documents filed in Epic Games v. Apple a trial last year revealed that Microsoft was considering lowering the revenue split for PC games “in exchange for granting streaming rights to Microsoft.”

If Microsoft had followed through with its plans, the company could have obtained exclusive streaming rights to some games, preventing them from being available on rival streaming services. It all depends on how publishing contracts are written, and Microsoft and Sony regularly book game exclusives that involve timed releases, console exclusivity, and lots of marketing dollars.

Microsoft is trying to convince Brazil’s CADE regulator that it should waive through the company’s proposed acquisition of Activision Blizzard for $68.7 billion. Although the Federal Trade Commission (FTC) is analyzing documents from Microsoft regarding its acquisition in the US, that correspondence is private. That is not the case in Brazil, where its competition regulator has released public documents that provide a unique insight into the business competition between Microsoft and Sony.

Microsoft has previously considered acquiring streaming rights for PC games in exchange for better revenue sharing.
Image: Microsoft

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

Of course, Microsoft disagrees, and Ubisoft, Riot Games, Bandai Namco, and Google have highlighted the competition to Call of duty in form Legends of Apex, Battle, PUBGand others.

Microsoft also claims that adding Activision Blizzard content to Xbox Game Pass will somehow increase competition. “The inclusion of Activision Blizzard content in Game Pass does not affect the ability of other players to compete in the digital game distribution market,” Microsoft claims in one document, where the company also argues that it increases competition thanks to “quality content at 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.

Call of duty it was at the center of competition fears surrounding Microsoft’s proposed acquisition of Activision Blizzard.
Image: Activision

Microsoft also argues that it is not distributing games as Call of duty at rival console stores “would not be profitable” for the company. Microsoft previously made it clear that it will keep Call of duty on PlayStation. Microsoft says that a strategy of not distributing Activision Blizzard games on rival consoles would only be profitable if the games could attract a high number of players to the Xbox ecosystem, resulting in revenue to compensate for losses from not selling these titles on rival consoles .

Whether or not Microsoft’s claims about “blocking rights” are accurate, this isn’t the first time Sony has used financial incentives to block game developers. Sony held back PS4 cross-platform play for years and implemented a cross-play revenue share for publishers who wanted to enable cross-play in their games.

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

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 back 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 or how Sony responds to Microsoft’s demands.

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