Report: Microsoft Didn't Mislead EU Regulators Over ZeniMax Deal - News
by William D'Angelo , posted on 09 December 2022 / 7,186 Views
Update:
Axios reporter Stephen Totilo has had a discussion with the European Commission and shared more information.
"First, the European competition commission says that it has no comment on whether it agrees that Microsoft didn’t stay true to its assurances to the EU on ZeniMax," said Totilo.
A representative for the European Union agency did tell him that "the Commission cleared the Microsoft/ ZeniMax transaction unconditionally as it concluded that the transaction would not raise competition concerns."
The representative added, "Microsoft did not offer any commitments to the Commission." But did add its conclusion on approving the ZeniMax deal did not rely on anything Microsoft said about the future of ZeniMax games being exclusive or not.
Microsoft in the original report from the agency on the ZeniMax deal did state it "would not have the incentive to cease or limit making ZeniMax games available for purchase on rival consoles."
The report had concluded from the EU agency: "Even if the combined entity was to engage in a (total or partial) input foreclosure strategy, the Commission considers that such a strategy would not have a material impact on competition in the EEA. Rival consoles would not be deprived of an essential input, and could still rely on a large array of valuable video game content to attract players."
Totilo in what he understands is that what the FTC stated this week is "not that Microsoft broke a promise to keep ZeniMax games exclusive. But that Microsoft gave assurances that it didn’t have an incentive to withhold ZeniMax games from rival platforms.
"By my reading, none of these statements contradict each other EU is saying it didn’t base its ZeniMax call on Microsoft pledges, didn’t get Microsoft pledges, just didn’t think those games going exclusive would be big enough Doesn’t tell us if they feel that about Call of Duty.
"FTC is saying that if Microsoft told the EU it didn’t need to go exclusive with ZeniMax games but did, then perhaps it’ll do the same again with [Call of Duty].
"As for Microsoft, it has told U.K. regulators that it makes sense for a Starfield to go exclusive and for a [Call of Duty] not to."
Warning: this is really in the weeds.
— Stephen Totilo (@stephentotilo) December 9, 2022
First, the European competition commission says that it has no comment on whether it agrees that Microsoft didn’t stay true to its assurances to the EU on ZeniMax
Original article:
The US Federal Trade Commission (FTC) yesterday had released a statement that it will seek to block Microsoft's Activision Blizzard acquisition.
The FTC claims "Microsoft decided to make several of Bethesda's titles including Starfield and Redfall Microsoft exclusives despite assurances it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles."
MLex has sent an email to the European Commission about the FTC accusation and the regulators in a response have said Microsoft did not make any commitments it would not release Xbox exclusive content following its acquisition of ZeniMax Media.
The lack of concerns over competition "did not rely on any statements made by Microsoft about the future distribution strategy concerning ZeniMax's games," said the commission.
The European regulators said that even if Microsoft were to restrict access to ZeniMax titles, it wouldn't have a significant impact on competition as other consoles would still have a "large array" of content.
"The commission cleared the Microsoft/ZeniMax transaction unconditionally as it concluded that the transaction would not raise competition concerns," said a European Union watchdog.
Thanks, ResetEra.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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That's what many of us were saying yesterday. The FTC has no case on this lol. The FTC are factually lying as to the reasoning for the lawsuit. That's not okay regardless of how you feel about this acquisition.
I'm personally not a fan of this deal, but if you're going to attempt to block it, give truthful facts on your arguments. Now you got the EC practically saying, "FTC, wtf are you talking about?" I wouldn't know the legality of this and how it will cause the case to play out, but it's honestly embarrassing.
Yeah. While technically the EU isn't calling the FTC out, they are doing so by any reasonable measure. I mean, they didn't have to say anything at all, right? The FTC lawsuit is doomed to failure, and they know that (which is why they did so in the FTC's own court, rather than in regular court, meaning they likely plan to withdraw the lawsuit once they get enough concessions).
Guess you need to read the update.
I was wondering if they were ever gonna pull back lol. I was not expecting any kind of response from the EC until their ruling. Guess it’s back to the waiting game. I just want it to be over lol
Unlikely to happen anytime soon. Seems like the FTC sue will drag things over 2023 and maybe even 2024 =[
Unless Microsoft offers suitable concessions. 10 years of CoD plus a PS version of Starfield, perhaps? Maybe 10 years of CoD and 10 years of Bethesda releases, even? I think that would be smart, honestly. Microsoft doesn't need exclusives releases, they just need subscription exclusives (everyone else pays $70). I said as much repeatedly on VGChartz after the Bethesda buyout, that they'd be smart to keep Starfield on PS.
Well, yes it is possible that concessions that Sony will voice as they accepting could make the deal finally move to approval without all this dragging.
Looks like I may have called it. Sounds like Microsoft is offering the FTC a consent-decree-level promise on Call of Duty, and offering Sony the option of putting Call of Duty into PS+. Sounds like Microsoft wants this deal badly enough that they'll just keep promising more and more until they get it done.
Yep it seems like it (there are even jokes with Phil promising to wash Jim's car for a year), if they keep increasing the promises will be hard for FTC to block unless customers themselves make some type of class action since the only company still against it is Sony.
Maybe all that talk about how King is the real jewel of the purchase for Microsoft is for real. It's certainly a big profit driver for ABK, and Microsoft apparently badly wants in to mobile. Maybe this really wasn't mostly about Call of Duty after all.
Which, actually, kind of makes sense when Microsoft already has Halo, Gears, Perfect Dark, Doom, Quake, Prey, etc. I suppose even Fallout is a shooter RPG.
In fact, Microsoft pledging early on to make Call of Duty a once-every-two-years event might mean they line up one of their OTHER shooter franchises to release in each of Call of Duty's off years. That'd be a really good strategy, actually.
That'd give each of Call of Duty's teams 4-6 years between releases, depending on whether they stick with three Call of Duty teams, or drop back down to two. And it would give lots of time between releases for Microsoft's teams working on all those other shooter franchises too.
If they're really smart they'll focus on games with multiplatform histories, such as Doom and Quake, to release in the off years to maximize their Sony (and Nintendo?) sales.
It could very well be, not sure why MS didn't offer to buy only King, perhaps ABK "forced" the deal to be wholesame due to all the bad rep they were having due to lawsuits and pr over their internal environment.
Oh, I think Microsoft definitely wants all of ABK. Call of Duty has undeniable value. Phil Spencer has talked about how much admiration he has for Blizzard's IPs, too. I think they want it all, but I think their willingness to offer whatever compromises are demanded of them with Call of Duty suggests that other parts of the ABK purchase are the single-biggest priorities for them. shrug :)
Gotcha, yes from a business standpoint ABK can generate a lot of profits.
In a recent Activision filing, they indicated that 1/3 of their revenues are from mobile and 3/4 of their customers are on mobile, to put it in perspective.
I would expect even more of revenue (or at least profit) to be from mobile, considering that even Sony in Japan with very few titles of note on mobile does make quite a lot of money (as much as I hate the MTX, mobile games are predatory on those and some hack a lot of cash indeed).
Activision and Blizzard bring in huge console and PC revenue. But you've hit the nail on the head when you point out that King's profits punch above their weight. So while mobile revenue is only about 1/3 of ABK's sales, mobile profits are higher than 1/3 I believe. And with 3/4 of their total customers being on mobile (a little bit is Call of Duty mobile and other mobile projects, but most of it is under King), that's a big asset to Microsoft's mobile ambitions too.
Hoeg Law, which is a respected channel that goes through court documents word by word (often reading entire documents on their channel line by line, as they discuss them) and dissects the claims and counter-claims, concluded that "The FTC didn't lie... but it's not being entirely truthful." FWIW.
Source: https://www.youtube.com/watch?v=bp3-4m-VVC0
Just let the merger finish so we don't have to put up with more of this nonsense.
This is reason enough for the judge to toss the FTC's case out. Most of their case is built on a false premise, that Xbox promised the European Commission that no future Zenimax games would be made exclusive. The EC refuting this statement proves the FTC's case is built on thin ice at best.
So did you read the update?
Updated with information from Axios reporter Stephen Totilo in a series of tweets.
The problem is that the federal government here in the US is out to get big tech. They're government, so lying, or at least playing fast and loose with the truth, is par for the course. But, even then, it appears that the FTC knows they cannot stop the deal from happening, thus they have not attempted to obtain an injunction to stop it.
I was one of the only one's here yesterday, to say that the FTC were flat out liars.....and was proven 100% correct.
That the fraudulent FTC can blatantly make such an obvious lie that the EU was given assurances by MS about Zenimax/Bethesda exlusivity, and make it a big part basis for their suit, makes a mockery of the FTC, including all the clowns who believe their childishly transparent lies.
All 3 that voted yes to this suit should be sacked immediately.
I guess you read the update right?
MS honored all outstanding contracts regarding games that were already being released. They do not have the same contracts for games that were still in development. those games were off the table and the FTC knows this. They can't use this as some sort of 'gotcha' to halt the deal. Again... the FTC knows this.
The FTC needs an external review. Those running it currently are a joke.
They have zero argument on the words "Case by Case" basis.
Sony buys studios and instantly make future games exclusive and MS claim case by case, they are getting sued. What a clown fest.
Is it FTC or Sony talking?
FTC has already Lost (Again) and the trial hasn't even started lol!
The FTC claims "Microsoft decided to make several of Bethesda's titles including Starfield and Redfall Microsoft exclusives despite assurances it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles."Â
MLex has sent an email to the European Commission about the FTC accusation and the regulators in a response have said Microsoft did not make any commitments it would not release Xbox exclusive content following its acquisition of ZeniMax Media.Â
These are different issues, the 1st is not countered by latter. MS making commitments to withhold would be the stronger position, but not doing so doesnt address whether or not they made representation they had no incentive to withhold. A representation easily disproven by pre-existing exclusives, but the question is whether they made such a representation about incentive.... not about commitments.
Why are you downvoted? This is just analysis on what's being said.
You're right about everything you say here. I said at the time that I felt it was a mistake to withhold Starfield from PS. What I suggested Microsoft should do is release it for PS4, with back-compat+ upgrades for PS5. That way PS users still get the game, but Microsoft can crow about the best way to play it being on Xbox and PC. And now I've been further proven correct that it was a mistake to withhold the game because it's become an issue with the FTC.
That said, the FTC is only suing them in the FTC's own court, not open court. That usually means they intend to extract a concession, and then retract the course case.
100 comments. Quite the article!
Saying you wont make the games exclusive, but make them exclusive right after is the very definition of misleading lol.
There sure are a lot of bots/trolls/fanboys here with no logicial argument.
MS never said they won't make new game exclusives and the EU has already confirmed this. You're spreading misinformation now.
Saying you have no incentive to do something and then do it afterwards is misleading.
Do you need a dictionary to look up misleading? Microsoft mislead that's a fact lol.
That's not what happened. This entire article is about what the EU and MS agreed on and the FTC is saying differently. I know you personally want this deal to die but the facts are facts and the FTC is lying or incompetent.
Maybe you could read the update.
I hope they get stopped. If they manage to buy out activision, what's to stop them from buying EA, ubisoft, other massive companies. Imagine microsoft having all these multiplats as day 1 on gamepass. There is no way sony will be able to compete. Not only will they be forced to adopt the same model, but they will have to play catch up, and then not have acess to the games.
The same government agencies that are trying to stop them now. With how much scrutiny MS is getting from this deal, they're never going to be able to buy up another publisher like this ever again.
But you realize that buying EA would be a new situation after MS's gaming division grew already with the Activision purchase? Allowing them to purchase a publisher like Activision doesn't automatically allow them to buy every other publisher as well...it's just illogical what you said. MS's gaming division is still way behind Sony's who are also still allowed to buy big games and decent sized studios away from Xbox and that as market leader. IF Xbox can reach the size of Playstation in the future then they won't be able to buy EA or Take 2...
Exactly. They're busting their butts buying Activision. I can't see them even trying to buy EA, Ubisoft, etc..
Microsoft has a policy of not buying their way to #1 in an industry now. Microsoft had a near death experience with antitrust regulators in the '90s, and I'm not exaggerating: regulators were talking about everything up to and including forcing Microsoft to be broken up into several different companies! Since then, they've not made any purchase that has catapulted them into #1 in a major industry. Nor have they organically grown to #1 in an industry since then. What is Microsoft #1 in aside from PC operating systems and office suites (a legacy that dates back to before the '90s)? They're #2 in cloud infrastructure behind Amazon. They're #3 in the console industry. They're nowheresville in mobile.
So making a second purchase anywhere close to the scale of Activision-sized (such as EA, Ubisoft, etc.) is a no-go. And if Microsoft ever grows to be #1 in the game industry (a title they've never held), I predict they'll stop making acquisitions entirely (perhaps except for the smallest of the small).
How is microsoft worth compared to sony?
Doesn't matter. IBM was worth more than PC clone companies, even as PC clones took over what we used to call the "IBM Compatible" market and now just call the PC market.
Microsoft is a huge company, but that hasn't allowed (as one of countless examples) Bing to catch up to Google search in any market.
Microsoft as a massive company wasn't able to establish a viable third player in the mobile market with Windows phones, either.
Google being a massive player wasn't enough to establish Stadia's viability.
Too many examples to count.
Microsoft is massive, in both video games and the pc market. The idea that they need to buy activision blizzard to play catch up to sony is laughable.
Microsofts intention isn't to compete, they want gamepass to be the place where "All" gamers go to., evetuallly. They couldn't care less if sony dies out and there is less competition.
I strongly disagree with your take. Despite some success with Surface devices, if Microsoft decided they really needed to catch up to Apple in the tablet race they'd have a lot of work on their hands. Similarly, despite being massive, if Microsoft wants to catch up to Sony they will absolutely need to do something different.
how is Sony not able to compete? They still have all their masterpiece 1st party games, those alone sell consoles. Why would they care what goes into Game Pass? You can still buy multiplat games for 70 Dollars on PlayStation, and their fan base loves to support the devs.
How much money does sony make from first party sales compared to third party?
Sony certainly can't compete with MS on buying Publishers, do you see Sony sitting on 69B USD to buy a publisher with it barely scratching their coffers?
