Trial Testimony Cracks Open Microsoft’s Black Box

Greetings!

The big news coming out of today’s proceedings in the Epic–Apple trial had nothing to do with either company. It was that Microsoft does not now, and never has made any money from the sale of its Xbox console. For a device that has been on the market for 20 years, it’s surprising that Microsoft has yet to figure out the economics so that it could at least break even by now. Then again, a lot of companies make little or no money on hardware but plenty of profits from related services—and that may well be true of Microsoft.

In fact, according to Lori Wright, the Microsoft gaming executive called to testify about its relations with Apple, Microsoft offsets the losses with a 30% commission it charges on game sales. Microsoft has other gaming revenue, including subscriptions to its Game Pass service. But here’s the thing: There is no way you can figure out how much money Microsoft makes or doesn’t make from gaming because Microsoft’s financial statements are a textbook example of obfuscation.