FTC approves Microsoft acquisition of Activision Blizzard

Microsoft's logo is seen on a smartphone placed on displayed Activision Blizzard's games characters in this illustration taken January 18, 2022. [REUTERS]

Korea’s antitrust regulator greenlit Microsoft’s acquisition of Activision Blizzard, one of the biggest deals ever in the video game industry.

The Fair Trade Commission (FTC) said Tuesday it gave unconditional approval of the $68.7 billion deal filed in April last year because of the limited influence the companies' games have in the domestic market.

“We’ve approved the deal after concluding there's no concern regarding limiting competition in the domestic gaming market,” said the FTC in a statement.

Activision Blizzard’s major game franchises include Starcraft, Diablo and Call of Duty.

Microsoft, which created the gaming console Xbox, applied for approval of the deal in April last year. With the acquisition, the company aims to add more games to its game subscription streaming platform, Game Pass Ultimate.

The financial watchdog evaluated the deal’s potential impact on competition in the domestic console and cloud gaming markets as a result of Microsoft's exclusive provision of Activision Blizzard games on its platforms.

“The chance of foreclosure is low, and even if foreclosure occurs, there is little concern of competitors being excluded from the market,” the FTC said.

“Unlike overseas, Blizzard’s major games aren't hugely popular” in Korea's console gaming market, it added.

Foreclosure is when a dominant company leverages monopoly power in one segment of the market to exclude competitors.

Call of Duty and Diablo accounted for between 0 and 2 percent of Korea's console game market, respectively, in 2021. Sony accounted for between 70 and 80 percent of the domestic console game, and Nvidia between 30 and 40 percent of cloud games.

The FTC exchanged opinions with overseas antitrust regulators before reaching its conclusion.

The acquisition deal was filed with the United States, EU, Britain and Japan.

The EU gave conditional approval for the deal in early May. Japan, China, Brazil and Chile gave unconditional approval.

British antitrust regulators blocked the deal in late April over concerns about how the deal would affect cloud gaming. Microsoft filed an appeal against the Competition and Markets Authority verdict against the deal in the same month, saying the move discourages technology innovation and investment in Britain.

The game market totaled $219.7 billion worldwide in 2021, up 8.7 percent on year.

Mobile games accounted for 45 percent of that market, followed by console games at 25 percent and PC games at 17 percent.

Korea’s game market was the fourth largest with 7.6 percent after the United States (22.0%), China (20.4%) and Japan (10.3%).

The game market in Korea was 19.11 trillion won ($14.2 billion) in 2021, up 12.1 percent on year. Mobile games accounted for the largest with 57.9 percent, followed by PC games at 26.8 percent and console games at a mere 5 percent.

BY JIN MIN-JI [jin.minji@joongang.co.kr]