The FTC has told PlayStation it must disclose its third-party exclusivity agreements

The Federal Trade Commission (FTC) has largely denied Sony’s request to quash a Microsoft subpoena asking it to disclose confidential documents.

Microsoft served Sony with the subpoena in January as part of the defense-building process ahead of an FTC lawsuit over its proposed acquisition of Activision Blizzard.

The subpoena included 45 separate requests for Sony documents, including copies of every third-party license agreement Sony has, and “all drafts and communications regarding” SIE President Jim Ryan’s statement to the FTC.

Sony sought to quash or limit the subpoena, arguing that a number of the requests were either irrelevant to the case or too time-consuming and expensive to complete. However, in a recently filed order from the FTC’s top administrative law judge, most of Sony’s arguments have been rejected.

Most notable among Sony’s requests was that an order to produce a copy of “every content license agreement (it has) entered into with a third-party publisher between January 1, 2012 and the present” be lifted, a request that has been denied.

Sony had argued that this information had no apparent value and that compiling the documents would mean an “unduly burdensome” manual review of over 150,000 contract records to find which were relevant.

Microsoft’s argument, with which the FTC has agreed, was that since much of the Activision Blizzard acquisition case revolves around whether access to the IP could result in Xbox-exclusive titles that could adversely affect competition, it was important to understand the full scope of Sony’s own exclusivity agreements and “their effect on industry competitiveness”.

One request the FTC made to Sony, however, was to limit the date range of documents requested – as such, only documents dated from January 1, 2019 to the present day will be required.

Another Sony request that was denied was a request not to include the files handled by certain Sony employees, with Sony arguing that many of them were in Japanese and would therefore be more time-consuming and expensive to search.

The FTC rejected this, saying that Sony could not “convincingly explain why searching for and producing (these) files constitutes an undue burden”.

In December, the FTC announced plans to sue Microsoft in an attempt to stop its $69 billion acquisition of Activision Blizzard, which the regulator claims will allow the company to “suppress competitors” to its Xbox console, subscription content and cloud gaming businesses.

Among other concerns, the FTC and Sony have expressed concern that the deal could significantly reduce PlayStation’s ability to compete, given that Microsoft would gain ownership of the Call of Duty franchise, which Sony has called “irreplaceable.”

In an effort to address regulatory concerns, Microsoft recently said it had offered Sony a 10-year, legally enforceable contract to make every new Call of Duty game available on PlayStation the same day it arrives on Xbox.

The FTC said in January that there had been no “substantial” settlement negotiations with Microsoft over the proposed acquisition. If it goes to trial, the case will be decided during hearings to take place in August 2023.