Epic Games CEO Tim Sweeney has said that Sony is the reason why the company is unable to offer Fortnite at a lower price on the PlayStation Store. Sweeney commented during the Epic v. Google trial, showing how aggressive Sony is when making deals with publishers and developers.
Sweeney said that the reason for this is a Most Favored Nations (MFN) clause in the contract between Epic and Sony (Thanks The Verge). Sweeney said that this clause is standard in PlayStation contracts, which makes sense overall since Sony doesn’t want players to go to other platforms due to pricing.
“We cannot sell out of PlayStation at a lower price than we sell on PlayStation.”
Epic Games CEO Tim Sweeney
Google has suggested that the MFN clause is shady, given Sony is now an Epic Games shareholder. However, Sweeney has denied this, saying that the clause is simply a standard part of PlayStation contracts.
The Verge used to have Spotify’s MFN clause with Sony up but took it down. However, we can still use their summary of it as an example:
“Section 13 [of the clause] essentially makes every major aspect of the contract amendable if any other label has a better deal or interpretation of that aspect than Sony Music. Section 13(2) lists the provisions which can be amended in Sony Music’s contract if a better deal is obtained by another music label, including what constitutes an “active user,” the definition of gross revenue, and any improved security provisions. Sony Music can call on an independent auditor once a year to determine whether Spotify has struck a more agreeable deal with any other labels.”
The MFN clause is just one of several issues that Epic Games has raised in its antitrust lawsuit against Google. Epic is also challenging Google’s 30% commission on in-app purchases, which it argues is excessive and anticompetitive. Sweeny isn’t usually as forthcoming with issues around deals with platforms but must be honest when asked questions in the lawsuit. The outcome of the lawsuit could have significant implications for the future of the app store ecosystem.
This is getting less popular over time as many have found it to be unfair. For example. The EU once went after Hollywood studios for similar clauses and only stopped when those studios withdrew those clauses from their contracts.
Generally, an MFN clause refers to a status conferred by a clause promising to treat another country equally to those receiving preferential treatment. With this clause in their deals, Sony will always get a good deal and this can only get better for Sony if Epic Games tries to get a better deal elsewhere. Based on their deal with Spotify – and Sweeny’s testimony – this is the same with every other partner Sony has.
Whether it is unfair or not allowing businesses to prosper is up to the jury to decide. However, the fact that Sony was brought up at all shows that Epic Games may not just stop at Google and Apple. If multiple partners for Sony want to, they could probably put an end to that clause in the contracts. Since Microsoft wasn’t mentioned at all, it seems like this may be a thing only Sony does.
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