Fair Trade Commission Approves 'MS-Blizzard' Merger... "No Concerns Over Competition Restriction"

"Blizzard Games Have Low Popularity in Korea... Low Possibility of Exclusive Supply by the Company"
UK 'Disallows', EU 'Conditionally Approves'

The Korea Fair Trade Commission (KFTC) approved the merger between Microsoft and game company Activision Blizzard on the 30th. This decision was based on the judgment that the merger would not substantially restrict competition in the domestic gaming market.

Earlier in January this year, MS announced its intention to acquire Blizzard for approximately 90 trillion KRW (68.7 billion USD). This is the largest acquisition Microsoft has pursued to date. The merger was reported to the KFTC on the 4th of last month.

The KFTC focused its review on whether, after the merger, MS would exclusively supply Blizzard’s popular games such as Call of Duty and Diablo to its own game services, potentially restricting competition in the domestic console and cloud gaming service markets. The review concluded that the likelihood of MS exclusively supplying Blizzard’s major games to itself is low, and even if it occurs, the risk of excluding competitors from the market is minimal.

The KFTC found that the combined market share of games developed and distributed by MS and Blizzard is low. Based on distribution, the domestic console game market share is between 2-4%, and the domestic cloud game market share is around 4-6%. Additionally, unlike overseas markets, Blizzard’s major games are not highly popular domestically, and there are many other popular game developers with whom competitors can trade as alternatives. Therefore, the ability to block competitors to the extent of excluding them from the market is considered insufficient. Even if blocking occurs, the relatively low popularity of Blizzard games means the effect of converting competitors’ consumers into MS service subscribers is small, and competitors hold a significant market share, so there is little risk of exclusion from competition. For domestic console games, Sony holds 70-80%, and for domestic cloud games, Nvidia holds 30-40% of the market.

However, the judgments of major competition authorities in other countries regarding this merger differ. The UK and the European Union (EU) found concerns about blocking in the cloud gaming service market. Accordingly, the UK decided to 'disallow' the merger, while the EU approved it on the condition that Blizzard games be licensed free of charge to competing cloud service providers for the next 10 years. Japan, China, Brazil, Chile, and others, like Korea, approved the merger without conditions, finding no concerns about restricting competition.

A KFTC official stated, "Considering that this is a merger between global companies, we exchanged opinions several times through video conferences with major overseas competition authorities," and explained, "The reason for differing judgments by each country is that there are significant differences in the competitive situations of each country’s gaming market, and competition authorities conducted reviews focusing on the impact on their domestic markets."