US Lawmakers Urge Biden Administration to Address Sony’s Anti-Competitive Practices in Japan

Sony Accused of Engaging in Anti-Competitive Behavior in Japan, at the Expense of Xbox

Sony’s dominance in the high-end gaming market has been called into question by US lawmakers, who accuse the company of engaging in anti-competitive practices in Japan. Democratic Senator Maria Cantwell made the allegations during a Senate Finance Committee hearing, stating that Sony’s exclusivity deals with third-party publishers are preventing Xbox from gaining a foothold in the Japanese market. Cantwell is not alone in her claims, as two letters from four Republican members of Congress and six Democrats have also urged action against Sony’s practices.

Urging the Biden Administration to Take Action on PlayStation-Xbox Console Competition in Japan

Members of Congress are pressuring the Biden administration to address Sony’s business practices in Japan that they believe are blocking US companies from competing in the Japanese gaming market. The lawmakers are concerned that Sony’s moves may violate Japan’s antitrust laws and the spirit of the U.S.-Japan Digital Trade Agreement. This concern is shared by six Democratic lawmakers from Washington state over similar issues.

Article 8 of the 2019 U.S-Japan Digital Trade Agreement calls for non-discriminatory treatment of digital products. While it is uncertain if this agreement would also pertain to game consoles, lawmakers claim that Sony’s significant market share of the high-end console market in Japan could be a result of discriminatory practices. The exclusion of Nintendo, a leading player in Japan’s console market, from the definition of “high-end consoles” cited by policymakers has also raised concerns.

Microsoft is involved in this push, and its government affairs team has discussed the issue with members of Congress. Sony’s antitrust tactics are coinciding with its pressure on antitrust regulators to block Microsoft’s $69 billion bid to buy Activision-Blizzard. House members are asking the Biden administration to raise the Sony issue with the Japanese government and identify additional barriers to American companies accessing the Japanese gaming market. The U.S. Trade Representative has promised to look into the matter.

US Senator Calls for Discussion on Sony’s Alleged Monopoly in the High-End Game Market

Democratic Senator Maria Cantwell raised concerns about Sony’s monopoly in the high-end game market during a Senate finance committee hearing on trade policy agenda. Cantwell accused Japan’s government of allowing Sony to engage in anti-competitive conduct through exclusive deals and payments to game publishers, which have led to a 98% market share allegedly held by Sony (excluding PC, Nintendo, and mobile games).

Cantwell asked US Trade Representative Katherine Tai for suggestions on how to address these issues and create a level playing field. Tai acknowledged the discussions between the US and Japanese governments over the digital economy and promised to follow up on the issue raised by Cantwell. The article notes that Cantwell’s biggest individual contributors of campaign finances have been Microsoft employees, while the proposed $69 billion dollar purchase of Activision Blizzard by Microsoft is currently being debated with Sony.

The monopoly in Japan’s high-end gaming market has significant implications for US companies, as it puts them at a disadvantage when attempting to enter this lucrative market. If Sony’s practices are found to be in violation of antitrust laws or trade agreements, it could have far-reaching consequences for not only Sony but also for Japan’s relationship with its international partners. As pressure mounts on Sony to change its ways, it remains to be seen how this situation will develop in the coming months.

Image Source: Wikimedia Commons