Microsoft Considered Acquiring Square Enix in 2019

Microsoft’s spending spree has spanned many corners of the industry over the last few years where studio acquisitions are concerned, but one market where Xbox still doesn’t have a foothold in Japan (even though now-first party studio Tango Gameworks is based there). Xbox boss Phil Spencer has often spoken about adding more Japanese firepower to the Xbox Game Studios banner– and it seems, in 2019, the company considered going after one of the biggest names out there.

As part of Microsoft’s ongoing court case with the FTC, recently published legal documents have revealed that Microsoft was considering an acquisition of Square Enix back in 2019 (via VGC). The documents confirm that the potential acquisition project was internally dubbed “Project Phoenix” by Microsoft, and eyed the Japanese publisher and its Western portfolio (the latter of which was eventually acquired by Embracer Group) as an acquisition candidate.

A number of factors seemingly contributed to this, including the strength of a portfolio that includes the likes of Final Fantasy, Dragon Quest, and Kingdom Hearts, while the byproduct of taking those established franchises off PlayStation would also have served as a bonus. Of course, a Square Enix acquisition would also have massively expanded Xbox’s presence in Japan, while Microsoft also considered the company to be a viable option through which to expand Game Pass’ presence on mobile platforms.

Other documents emerging from the Microsoft vs FTC trial have shed light on a number of other companies that Microsoft has considered acquiring in recent years, including the likes of Sega and Bungie. Microsoft apparently had a watchlist of over a hundred developers in 2021, which included names like FromSoftware, CD Projek RED, Team Cherry, Remedy Entertainment, Larian Studios, and more.