According to a recent report from Axios, the state of affairs between PlayStation and Xbox in Japan has taken a turn, and certainly not for the better. Policymakers are pressing the Biden administration, claiming that Sony’s business practices are making competition difficult for US companies in the gaming market, namely Microsoft. These tactics have hurt Xbox’s position in this market. During a trade hearing, Senator Maria Cantwell brought up the issue to US Trade Representative Katherine Tai. The Biden administration then received two letters that aimed to address the imbalance in the Japanese video game market and how it affects Microsoft. These letters allege that PlayStation has unfairly gained a 98% stake in the high-end console market in Japan and has signed multiple deals to keep Japanese games from Microsoft’s Xbox.
This is particularly concerning given Sony’s recent demands for “fair competition” in arguments with the FTC and the CMA. Xbox is on the path of acquiring Activision Blizzard and the Call of Duty IP in the west, making this issue even more important. The Republican letter claims that the deals made by Sony in Japan may even violate Japan’s antitrust laws.
Sony is Actively Hurting Competition According to Congress
The effective policy of non-prosecution by the Japanese government when it comes to Sony appears to be a serious barrier to US exports, with real impacts for Microsoft and many US game developers and publishers who sell globally but see their earnings in Japan stifled by these practices. Both Democrats and Republicans have penned letters to demand an investigation into Sony and PlayStation’s business practices. A Microsoft spokesperson told Axios that Sony’s anti-competitive tactics do deserve discussion. Still, they did not mention their involvement in orchestrating this push that so coincidentally matches Sony’s stance against the Activision Blizzard deal.
The House members have asked that this issue be raised with the Japanese government to identify “additional barriers” to American companies that may prevent them from accessing the Japanese gaming market. It is unclear what the outcome of this investigation will be, but it is worth keeping an eye on, particularly in regard to the Activision Blizzard deal.