In a new documentary about Xbox’s history, Power On, it was revealed that Rockstar approached Microsoft with a pitch for Grand Theft Auto 3. It would have been an exclusive for the original Xbox, but Microsoft rejected the proposal.
Microsoft was looking for third-party content to publish on its debut console, looking worldwide in North America, Europe, and Japan. Kevin Bachus, who worked on third-party relations from 1999 to 2001, said that a “small publisher” wanted to bring one of its 2D games to 3D. The publisher was committed to investing time and resources to make that transition.
However, Microsoft executives eventually turned down the pitch, citing that they didn’t believe the studio was capable. Additionally, they didn’t believe the user interface was good, and that previous entries in the franchise didn’t sell all that well.
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Source: Game Spot Mashup