US members of Congress accuse Sony of ‘blatant anti-competitive conduct’ in Japan

According to Politico, Democratic senator Maria Cantwell made the assertion on Thursday during a hearing of the Senate Finance Committee. She urged US trade representative Katherine Tai to bring up the matter with Japan during trade negotiations.

Cantwell’s claim was supported by two letters – one from four Republican members of Congress, the other from six Democrats – which also called on Tai and commerce secretary Gina Raimondo to take action.

The charge is that Sony knowingly enters into exclusivity agreements with outside publishers in order to prevent Xbox from establishing a presence in Japan.

When asked about Sony’s apparent anti-competitive behavior, Cantwell said, “I’m told that Sony controls a monopoly of 98% of the high-end game market, yet Japan’s government has allowed Sony to engage in blatant anti-competitive conduct through exclusive deals and payments to game publishers.”

The corresponding Republican letter claims: “We understand that Sony, which holds 98% of the market, pays third-party game publishers not to make their content available on Xbox and systematically negotiates exclusivity arrangements that keep the most popular games in Japan off Xbox.”

Both letters claim that by not acting on these alleged anti-competitive practices, Japan is effectively putting a US company at a disadvantage.

It asserts that the effective policy of non-prosecution adopted by the Japanese government with regard to Sony “appears to be a serious barrier to U.S. exports, with real impacts for Microsoft and the many U.S. game developers and publishers that sell globally but see their earnings in Japan depressed by these practices.”

“Such policies can distort trade every bit as much as high tariffs or non-tariff barriers like discriminatory licensing practices, with the same result of allowing a domestic incumbent to protect its market share from foreign competitors.”
Sony has secured a number of third-party titles as PlayStation console exclusives over the years, some of which have come from Japanese publishers. One of the most notable examples of this is the company’s ties with Square Enix, which have seen Final Fantasy VII Remake and Final Fantasy XVI excluded from Xbox.

Another notable example from the previous generation was Capcom’s Street Fighter V, which has only ever been available on the PS4 and PC since its 2016 release.

According to Axios, the raising of this issue may have been in some way influenced by Microsoft. Although the publication can’t definitively say to what extent this is the case, it does claim to have knowledge that Microsoft’s government affairs team discussed the issue with members of Congress.

In addition, Microsoft spokesman David Cuddy told Axios: “We welcome further investigation to ensure a level playing field in the video game industry. Sony’s anti-competitive tactics deserve discussion.”