US Congressmen Allege Sony Is Hurting Xbox In Japan

A bipartisan group of 11 congressmen has written notes to the Biden administration claiming that Sony is actively working against Xbox in the Japanese market, Axios reports. The congressmen allege that Sony is participating in anti-competitive behavior In the country, aimed at keeping Xbox consoles and games from competing in Japan.

Four congressional leaders wrote to US ambassador Katherine Tai and commerce secretary Gina Raimondo about allegations that Sony is actively violating the U.S.-Japan Digital Trade Agreement. This trade agreement limits tariffs on and ensures non-discriminatory behavior against American digital products, which includes video games and gaming consoles. 

These letters come at a time when Microsoft and Sony are engaged in a battle with regulators around the world over Microsoft’s proposed acquisition of gaming giant Activision Blizzard. Sony actively opposes the deal and is currently lobbying authorities in the EU and UK to strike down the proposal. Playstation boss Jim Ryan told Activision executives that he wants to “block your merger.”

One of the main arguments of the congressmen is that Sony signs exclusivity deals with Japanese developers and publishers to keep popular Japanese video game titles exclusive to the PlayStation ecosystem. Sony has signed deals for popular Japanese games across the years, such as Bloodborne, Demon Souls, Final Fantasy 16, and more. 

The Congressmen also allege that the Japanese government is doing little to stop what they claim is Sony actively keeping Xbox from competing in the market. They allege that the Japanese government is doing little to combat what they believe is anti-competitive behavior in order to protect a domestic company from foreign competitors.

Microsoft is one of the largest employees in the state of Washington, and the gaming industry itself has a huge footprint in the state. A group of congressmen from Washington State sent a separate letter to Tai and Raiomondo, asking them to take action against Sony, alleging that Sony’s actions are hurting the gaming industry in the state.

Despite these allegations, 2022 was a record year in Japan for Xbox. In 2022, Xbox doubled the sales of its Xbox Series X and S consoles, with 270,000 units sold in 2022, against 400,000 units sold in total. Sony does have a clear advantage in Japan. Sony sold over 360,000 units of the PS5 in February of the year alone. Sony sold 1.1 million PS5s in Japan in 2022. Nintendo takes the crown with 4.8 million units sold in the country. 

However, these significant differences could be explained by consumer preferences. Consumers in Japan may prefer homegrown consoles over Xbox. Historically, Xbox has never had a strong foothold in Japan. Going back to 2002, the original Xbox never really fit into the Japanese market. The Xbox 360 performed much stronger; however, it also fell short of Sony and Nintendo. Xbox One sales in Japan were abysmal.

It should be noted that Sony and Nintendo consoles have historically outsold Xbox in the US and in Europe as well. In the US, the PS4 sold over 53 million units, while Xbox One sold over 31 million. The PS5 is also outselling the Xbox Series X and S in both the European and North American markets.  The Nintendo Switch has outsold both in all markets. 

It is likely this is the result of lobbying from Microsoft against Sony in order to give it an upper hand in negotiations over the approval of the Activision deal. Microsoft is trying to appear as an underdog to regulators who believe the deal could be anti-competitive. With Sony actively lobbying against the deal, Microsoft may be trying to win over support from congressional leaders.