Money Today Sejong = Reporter Yoo Jae-hee | 2023.04.20 14:28
The Fair Trade Commission will complete the review of the 90 trillion Microsoft (MS)-Blizzard (M&A) merger and acquisition next month. The main issue in this review is the concern about monopoly in the console market.
It is positive that Microsoft’s share of the Xbox in Korea is surprisingly low. That is why the competition authorities are expected to approve it like the Japanese authorities. However, concerns about competition restrictions from competition authorities such as the US and China are a variable.
According to related industries on the 20th, the Fair Trade Commission decided to decide whether to approve the business combination review for Microsoft’s acquisition of Blizzard within the next month. This is a conclusion about a year after the Fair Trading Commission received a business combination report in April last year. A business merger review is a process of analyzing the impact of an M&A on the market and taking remedial measures if competition restrictions such as monopoly issues are recognised.
Microsoft, famous for its ‘Windows’ computer operating system, acquired Blizzard last January for US$68.7 billion (about 90 trillion won), the largest amount in the history of information and technology (IT) in the United States. Blizzard is an extremely large gaming company and owns many game intellectual property (IP) rights such as Call of Duty, World of Warcraft, Overwatch, and Starcraft.
“XBOX is not popular, PS is Ichiban (1st place)”… Japan, Korea approval?
For Microsoft to complete the acquisition of Blizzard, it must pass screening by competition authorities in 16 countries where it has joined the business. The Korean Fair Trade Commission’s review is also essential.
Some are concerned about the monopoly in the console market after the acquisition of the Xbox game console series and the Xbox Game Pass subscription service. It’s a problem, like Blizzard excluding competitors through exclusive contracts with Xbox.
What is notable is the decision of the Japanese competition authorities. The Japan Fair Trade Commission (JFTC) approved the business combination in March, even though Sony, a local company, is under competitive threat.
It is known that the Japanese authorities made this decision because Sony PlayStation’s market share in the country is overwhelming. It is also true that Xbox’s share in the Japanese market is only 1%.
In light of this, it is very likely that Korea will also decide on approval. According to the Korea Creative Content Agency, the console market size in the domestic market will only reach 1.52 trillion won (5%) in 2021. In particular, the fact that Blizzard’s Call of Duty is sluggish in the domestic market also adds strength to the outlook.
However, the question is how much domestic consumer benefits will be limited in future game supply prices. The Fair Trading Commission can impose conditions of approval to limit price-raising pressure.
The UK and the EU are positive… There is a problem of “big tech monopoly concerns” in the US and China
Competition authorities such as the UK and the European Union (EU) will also reach a conclusion next month. The UK’s Competition and Markets Authority (CMA) took an opposing view on the M&A, but turned to approval last month. The EU Commission is also positive after Microsoft revealed its position that it would provide ‘Call of Duty’ licensing agreements to competitors after the merger.
The problem is the US and Chinese competition authorities. The US Federal Trade Commission (FTC) has filed an antitrust lawsuit regarding the merger between the two companies. In particular, it is burdensome that Chairman Rina Khan has been targeting the Big Tech monopoly problem. China’s State Administration for Market Regulation (SAMR) is also delaying the review, fearing it will restrict competition.
Aside from the Korea Fair Trade Commission’s approval, the prospects for Microsoft’s takeover are still unknown. The original aim was to complete the M&A by June.
In May, the Fair Trading Commission will decide whether to approve or not by presenting the report of the review relating to business combinations (the examiner’s conclusion) to a full meeting (the court’s first trial function). If there is no anti-competition, the examiner’s line can also approve it. An official from the Fair Trading Commission said, “We cannot explain the issues that are currently under review.”
[저작권자 @머니투데이, 무단전재 및 재배포 금지]