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Congressmen from both sides of the aisle are urging the Biden administration to take action against the PlayStation-Xbox console competition in Japan.
Driving the news: Policymakers voiced concerns to Biden officials last week, saying Sony’s business practices in its native Japan prevent U.S. companies from competing in that country’s gaming market and could violate U.S.-Japan trade deals .
The unexpected pressure became public Thursday when Senator Maria Cantwell (D-Wash.) urged US Trade Representative Katherine Tai during a trade hearing. Ten members of the House of Representatives also sent two letters to Tai and Commerce Secretary Gina Raimondo on Thursday urging action.
What They Are Saying: “Today we are writing to alert you to the unbalanced Japanese video game market, which we fear may be the result of discriminatory trade practices that may go against the spirit of the US-Japan Digital Trade Agreement. said one of the letters, signed by four House Republicans, including Carol Miller (RW.Va.) and Mike Carey (R-Ohio).
The Republican letter claims that Sony PlayStation owns 98% of the “high-end console market in Japan,” signs agreements aimed at keeping hit Japanese games off Microsoft’s Xbox, and says such moves “violate Japan’s antitrust laws.” The Japanese government’s effective non-tracking policy appears to be a serious impediment to US exports, with real implications for Microsoft and the many US game developers and publishers that sell worldwide but base their revenues in Japan burdened by these practices The letter continues. A letter to Tai and Raimondo from six Democratic lawmakers from Washington state — where Microsoft is based — addresses similar issues.
Between the lines: Article 8 of the 2019 US-Japan Digital Trade Agreement calls on countries to allow “non-discriminatory treatment of digital products,” which would include games. What is less clear is whether it would also affect gaming consoles.
State of affairs: Sony has had a major advantage over Xbox in Japan for decades, although the secrecy of gaming contracts obscures the underlying causes.
Sony occasionally secures big platform exclusives, like with SquareEnix’s Final Fantasy XVI, a Japanese-made game that’s expected to be big with Japanese (and global) audiences and is planned only for PlayStation, not for Xbox Two horse race: Nintendo, exempt from the policy-cited definition of “high-end consoles,” crushes Sony and Microsoft.
Big picture: The heat on Sony unmistakably coincides with the Japanese company’s own pressure on antitrust authorities to block Microsoft’s $69 billion bid to buy Activision-Blizzard.
“Sony’s anti-competitive tactics deserve a discussion, and we welcome further investigation to ensure a level playing field in the video game industry,” Microsoft spokesman David Cuddy told Axios. According to Axios, the government affairs team has discussed these issues with members of Congress. Sony officials did not respond to a request for comment.
What’s Next: In their letters, members of the House of Representatives call for the Sony issue to be raised with the Japanese government and cite “additional barriers” for American companies to enter the Japanese gaming market.
At Thursday’s Senate hearing, sales representative Tai Senator Cantwell promised to look into things. “This is new to me,” she said.
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