New report from MLex with more details about the KFTC decision:
- KFTC's Im Kyeong-hwan said during a background briefing with reporters that: "There might be criticism that we have taken a lenient approach to the merger involving a Big Tech company, especially as some global regulators like those in the EU or the US, have raised issues about the deal". "But we'd like to highlight that we have carefully scrutinized the impact it might have on the competitive landscape within our local markets and made our assessments accordingly."
- The regulator's review primarily focused on the potential for competition to be stifled in console and cloud gaming services, to see if MS could choose to supply Blizzard's popular games exclusively to its own platforms. The review concluded that the likelihood of Microsoft implementing such a strategy is small, and, even if Microsoft were to do so, the chances of other competitors being pushed out of the markets are low due to the combined market shares of their games being relatively small and the presence of other game developers with a variety of popular titles.
- The KFTC did not express any concerns about the potential for Microsoft to obstruct competition by blocking access to Blizzard games on Sony's PlayStation because the combined market share is very small, at most 2 percent, Blizzard's comparatively lower game popularity in South Korea and the robust alternative sources of supply available to Sony.
- Call of Duty's market share is less than 2 percent in South Korea, while it's up to 8 percent globally.
- While the KFTC expressed uncertainty about Microsoft's potential incentives for limiting the Blizzard games on PlayStation, pointing out to the company's move to restrict access to certain titles from Zenimax, as a long-strategy, they didn't find any no clear short-term monetary benefits.
- The market shares, based on game sales in 2021, are PlayStation with 70 to 80 percent, Nintendo with 10 to 20 percent, and Xbox with 0 to 10 percent.
- The KFTC noted that if Microsoft's competitiveness increases as a result of the merger, it could paradoxically enhance competition within the console gaming market.
- The KFTC differed from its UK and EU counterparts regarding cloud gaming, determining that the deal's vertical integration of cloud gaming distribution and services markets does not pose a competitive threat by restricting Nvidia and other competitors' access to Blizzard games.
- The KFTC pointed out that Microsoft and Blizzard's combined share of the cloud gaming market is small, sitting between 4 to 6 percent, and there are numerous other distributors, including Smilegate, Tencent and EA, providing popular titles like Lost Ark, League of Legends or Battlefield.
- In South Korea the popularity of console games is eclipsed by PC games, which limits Microsoft's ability to block competition, given that it delivers only console games, not PC games, via cloud. The regulator said even if Microsoft were to provide Blizzard games, to Nvidia via a streaming license, it would likely boost the revenue from game downloads, reducing Microsoft's incentive to block access.
- The KFTC also underlined that while it's true that Microsoft commands a significant market share in cloud gaming, 60 to 70 percent, and that there's a notable entry barrier in the cloud gaming services market, the popularity of Blizzard games, again, is not overwhelming, and considering the domestic preference for PC games over consoles, Nvidia could potentially have a brighter future since it provides existing PC games via cloud.
- The KFTC said that the cloud gaming service market is still nascent, with the leading businesses shifting annually: Microsoft in 2020 and 2022, and Nvidia in 2021. The market currently represents just 0.02 percent of the total gaming market (in South Korea, I guess), and with potential future entrants like Sony and Amazon, the competition isn't likely to be stifled.
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So far, 5 regulators have reviewed the cloud gaming market:
- EC (Europe): concerned about it but too small and nascent; behavioural remedies are enough.
- FTC (US): concerned about it, nascent but it will become a reality soon; behavioural remedies are not enough.
- CMA (UK): concerned about it, nascent but will become a reality in 5 years, behavioural remedies are not enough.
- JFTC (Japan): not concerned about it, nascent market, hard to measure, too small right now.
- KFTC (South Korea): not concerned about it, nascent market, too small right now.
Next ones should be Canada, New Zealand and Australia :P
