Internal Docs Reveal Microsoft's Interest in Square Enix Acquisition

Quincy Jon, Tech Times 28 June 2023, 03:06 pm

Microsoft's contemplation of purchasing Square Enix, the publisher of the Final Fantasy franchise, to strengthen its Xbox Game Studios was revealed in a recent evidentiary hearing between Microsoft and the US Federal Trade Commission (FTC).

The document, which was dated 2019, explained Microsoft's justification for the proposed purchase. Enhancing Xbox's footprint in Asian markets was one of the company's main goals in light of Square Enix's considerable influence and established presence there, IGN reported.

In addition, Microsoft wanted to use Square Enix's extensive library of games, which included titles like Kingdom Hearts, Dragon Quest, and Final Fantasy, to promote Xbox Game Pass and Project Scarlett, the then-upcoming Xbox console generation.

Microsoft Wanted to Gain Edge in the Gaming Industry

Unexpectedly, the internal material also disclosed Microsoft's desire to acquire an advantage over rivals in the mobile gaming industry. Microsoft recognized the possibility of creating a mobile-native Xbox Game Pass SKU by merging Square Enix's extensive mobile-native catalog with its own, according to The Verge. Square Enix's premium versions of vintage titles were seen to have considerable value for a subscription service like Game Pass.

Since the paper did not include any follow-ups or reactions, it is unclear how far Microsoft pursued Square Enix. However, the information raises interest in the potential outcomes of such a collaboration. Given recent high-profile Square Enix PlayStation-exclusive games like Final Fantasy 7 Remake and Final Fantasy 16, the possible partnership may have greatly impacted the gaming industry.

According to the internal Xbox document, Microsoft considered buying not just Square Enix but also other significant publishers. According to the memo, Microsoft was considering buying Sega, IO Interactive, Bungie, and several other businesses to fill in any content shortfalls and expand its gaming portfolio.

Activision Blizzard CEO Speaks Before US Court

In a related update, Activision Blizzard CEO Bobby Kotick went before a federal court to argue that Microsoft bought his firm for $69 billion. Kotick highlighted that restricting "Call of Duty" to a single platform would drive away the game's enormous player base, which numbers more than 100 million monthly users, per Reuters. He voiced worry about how removing the game from the PlayStation, which Sony Group makes, may hurt Activision's revenue.

To enable its judge to decide the issue, the Federal Trade Commission has requested a temporary halt on Microsoft's purchase of Activision. The FTC voiced worries about the purchase because it would give Microsoft exclusive access to Activision games, possibly harming competition with Nintendo and Sony Group. The FTC has tightened its rules on mergers during the Biden administration.

Microsoft has offered to license "Call of Duty" to other platforms to allay antitrust concerns. It has also made the case for the financial advantages of licensing games to several participants. The United States FTC and UK Competition and Markets Authority oppose the merger, despite other nations' authorization.

In related news, Google is also suing Microsoft before the US Federal Trade Commission for utilizing its business software monopoly to force consumers to utilize its cloud services.

Google claims that Microsoft tied customers to separate contracts with its Azure cloud services firm using licensing terms in its Office 365 productivity suite, according to a previous TechTimes report.