Microsoft is currently squaring up with the US Federal Trade Commission (FTC)  over the Activision Blizzard deal, which is worth $69 billion.

Following the company's announcement about the increased pricing of Xbox Series X, it claims that the Xbox console is always behind the "console wars."

Microsoft Has Consistently Lost Console Wars

Throughout the years, Microsoft has seen that its sales for Xbox consoles were being overshadowed by its two main rivals in the industry: Nintendo and Sony.

Since it officially entered the gaming market in 2001, it always trailed behind the two gaming giants in history. It only ranks third as a result.

According to a report by IGN on Thursday, June 22, the 2021 market share for Xbox was only 16%, Microsoft said in its submitted document. 

Meanwhile, Nintendo and PlayStation did not disclose their shares in the said year.

Microsoft Gambles Big on Game Sales than Console Sales

Microsoft goes on to argue that, as a result, it is "betting on a different strategy" by generating profit through game sales rather than console sales and selling its consoles at a loss, "effectively subsidizing gamers' purchase of the hardware in hopes of making up the revenue through sales of games and accessories."

All of these arguments are part of a much larger set-up in Microsoft's defense against the FTC, which seeks to pause its $69 billion acquisition of Activision with a preliminary injunction, which Microsoft is battling against in court this week. 

If the injunction passes, it will halt the deal until an evidentiary hearing on August 2, which falls after the set date for the deal to close on July 18, 2023. It would potentially allow the parties to renegotiate the merger.

The FTC seeks to stop the merger due to concerns it would allow Xbox to dominate the games market in part by making games such as Call of Duty Xbox-exclusive, something Microsoft has vehemently denied it would do.

Furthermore, Microsoft is arguing its status as the third-place gaming console makes the merger necessary to cement itself as a viable competitor with rivals such as Sony and Nintendo.

Related Article: Xbox Series X and Xbox Game Pass Gets Price Hike: Microsoft Raising Prices for Everything?

Xbox Console Price Hike Not in Microsoft's Plans Previously

Back in September 2022, we remember Phil Spencer, the head of Xbox gaming, said that the Redmond firm had set aside its plans to make changes to the pricing of Xbox consoles. The announcement came after Sony announced that the prices of PS5 would skyrocket across North America, Europe, and Japan.

According to Video Games Chronicle at that time, Spencer told CNBC that the adjustment to their console pricing strategy wouldn't be implemented sooner. He saw this opportunity as an inappropriate period to do so.

"And I can definitely say we have no plans today to raise the price of our consoles. We think in a time when our customers are more economically challenged and uncertain than ever, we don't think it's the right move for us at this point to be raising prices on our console," Spencer previously said.

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