Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE  
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel,   BELGIË  
 
Tel: +32 229 -91111. Fax: +32 229 -64301. E -mail: COMP -MERGER -REGISTRY@ec.europa.eu .  EUROPEAN COMMISSION  
Brussels, 05.03.2021  
C(2021) 1607 final  
PUBLIC VERSION  
 
Microsoft Corporation  
One Microsoft Way 8/2284  
Redmond  WA 98052  
United States of America  
Subject : Case M. 10001  – Microsoft/Zenimax  
Commission decisio n pursuant to Article 6(1)(b) of Council Regulation 
No 139/20041, 2 and Article 57 of the Agreement on the European 
Economic Area3 
Dear Sir or Madam,  
(1) Following a referral pursuant to Article 4(5) of the Merger Regulation,  the European 
Commission received  on 29 January 2021  notification of a proposed concentration 
pursuant to Article 4 of the Merger Regulation by which  Microsoft Corporation 
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the ‘Merger Regulation ’). With effect from 1 December 2009,  the Treaty on the 
Functioning of the European Union ( the ‘TFEU ’) has in troduced certain changes, such as the replacement 
of ‘Community ’ by ‘Union ’ and ‘common market ’ by ‘internal market ’. The terminology of the TFEU 
will be used throughout this decision.  
2  For the purpose of this Decision, although the United Kingdom withdrew from the European Union as of 
1 February 2020, according to Article 92 of the Agreement on the withdrawal of the United Kingdom of 
Great Britain and Northern Ireland from the European Union and the European Atomic Energy 
Community (OJ L 29, 31.1.2 020, p. 7), the Commission continues to be competent to apply Union law as 
regards the United Kingdom for administrative procedures which were initiated before t he end of the 
transition period.  
3  OJ L 1, 3.1.1994, p. 3 (the ‘EEA Agreement’).  
In the published version of this decision, 
some information has been omitted 
pursuant to Article 17(2) of Council 
Regulation (EC) No 139/2004 
concerning non -disclosure of business 
secrets and other  confidential 
information. The omissions are shown 
thus […] . Where possible the 
information omitted has been replaced by 
ranges of figures or a general description.  
 
 
2 (“Microsoft”, USA) intends to acquire sole control of ZeniMax Media Inc. 
(“ZeniMax”, USA) within the meaning of Artic le 3(1)(b) of the Merger Regulation  
(the “Transaction”).4 Microsoft and ZeniMax will together be referred to as the 
“Parties”  and Microsoft will be  referred to as the “Notifying P arty”. 
1. THE PARTIES  
(2) Microsoft  is a global technology company, which offers products and services to its 
customers through the following segments: (i) Productivity and Business Processes; 
(ii) Intelligent Cloud; and (iii) More Personal Computing (“MPC”). As part of the 
MPC operating se gment, Microsoft develops, publishes and distributes games for 
personal computers (“PCs”), video game consoles and mobile devices. Microsoft 
also offers the Xbox gaming console and related services, such as the Xbox Live 
online gaming service and the Xbox Game Pass gaming subscription service.  
(3) ZeniMax  is a privately held  company  that develops and publishes games for PCs, 
consoles and mobile devices. As part of its broad portfolio of games, ZeniMax 
develops and publishes video game franchises such as “The El der Scrolls” and 
“Fallout”.  
2. THE OPERATION  AND CONCENTRATION  
(4) The Transaction will be implemented by means of an Agreement and Plan of Merger 
(the “APM”) entered into on 19 September 2020 between Microsoft, Vault Merger 
Sub, Inc. (“Vault”) and ZeniMax. Under  the APM, Vault, a newly created Microsoft 
subsidiary, will be merged with , and into , ZeniMax. Following this merger, Vault 
will cease to exist, and ZeniMax will be a wholly owned subsidiary of Microsoft.   
(5) Following the Transaction, Microsoft will exercis e sole control over ZeniMax. The  
Transaction therefore constitutes a concentration within the meaning of Article 
3(1)(b) of the Merger Regulation.  
3. UNION  DIMENSION  
(6) The Transaction does not have a U nion dimension within the meaning of Articles 
1(2) or 1(3) o f the Merger Regulation, because ZeniMax’s total Union turnover does 
not exceed EUR 250 million (ZeniMax: [100-150 million] , Microsoft: [10.000 -
50.000  million ]) and ZeniMax’s aggregate turnover is not more than EUR 25 million 
in each of at least three Member States . 
(7) Following the Notifying Party’s reasoned submission pursuant to Article 4(5) of the 
Merger Regulation  that the concentration should be examined by the Commission, 
the Commission has transmitted this submission to all Member States. No Member  
State has expressed its disagreement within a period of 15 working days . The 
Transaction meets the legal requirements set out in Article 4(5) of the Merger 
Regulation: (i) it is a concentration within the meaning of Article 3 of the Merger 
Regulation; and  (ii) it is capable of being reviewed under the national competition 
                                                 
4  Publicatio n in the Official Journal of the European Union No C 40, 5.2.2021 , p. 21. 
 
 
3 laws of at least three Member States, which are (i) Austria, (ii) Cyprus, and (iii) 
Germany. The Commission informed the Notifying Party on 18 December 2020 that 
the case was deemed to ha ve a U nion dimension.  
4. RELEVANT MARKETS  
(8) The Transaction leads  to competitively relevant links with regard  to the 
development , publishing , and distribution  of video games. Video games are 
electronic game s played by manipulating images on a video display or television 
screen.  Video games are developed for  PCs, gaming consoles , and mobile devices 
(such as smartphones). In particular, the competitive ly relevant links  between the 
Parties concern the following two levels within  the video -gaming value chain:  
(a) Game software development and publishing : the development (including 
design, art, programming, and testing, usually taking place in a development 
studio) and the making available to the public of a video game . Microsoft and 
ZeniMax are active  in the development  and publishing of console games in 
both physical (discs) and digital form ; and 
(b) Game distribution : the distribution of games to the public in either physical 
or digital form, through (i) physical retail (online and “brick -and-mortar ” 
retailers ) and (ii) online download/streaming, via digital storefronts5, app 
stores and subscription services) . Microsoft is active  in the operation of 
digital storefronts selling console games in digital form .6 
4.1. Game software development and publishing  
(9) Game softwar e development and publishing refers to the development (including 
design, art, programming, and testing, usually in a development studio) and the 
making available to the public , for sale or free  of charge , of a video game.  In the 
present decision, video ga me software development and publishing will be analysed 
together  (hereafter “ video games publishing”) . 
 Relevant product market  
4.1.1.1.  The Commission’s previous  practice  
(10) In Activision Blizzard/King , the Commission concluded that there were indications 
that the mar ket for game software publishing could be segmented by hardware, 
                                                 
5  Video games, associated content and related services may be distributed through digital storefronts. These 
storefronts are usually accessible to players at any time and from anywh ere as apps and/or websites that 
offer video games for PCs or console. For example, players using consoles can purchase games through 
the console -specific storefront (which enables automatic download onto consoles linked to storefront 
accounts). Microsoft operates the Microsoft Store, an app store on Windows PCs, and the Xbox Store 
(since late 2017 also rebranded as the Microsoft Store), an Xbox console user -facing storefront, which can 
be accessed via Xbox consoles or a web browser.   
6  ZeniMax also owns and operates a digital storefront, Bethesda net, where it offers ZeniMax PC content 
for download. However, ZeniMax does not sell third -party games on its digital storefront. Similarly, 
ZeniMax provides game subscriptions for ZeniMax content, i.e., The Elde r Scrolls Online (“ESO”) and 
Fallout 76, but not for third -party content. In this decision, reference to game distribution means 
distribution of first - and third -party content unless specified otherwise.  
 
 
4 namely (i) PC games, (ii) console games, and (iii) mobile games.7 The Commission 
found indications that mobile games in particular  constitute a distinct market , given 
their nature, technical features, different pricing structure, different production costs, 
and different distribution channel s (native mobile games  being  largely distributed 
through app stores).8 Overall, however, the Commission argued that the “lines 
between different platforms are blurring, because games are often released on 
several platforms, there is substantial substitutability between games” .9  
(11) The Commission further considered a  segmentation by reference to the type of 
game r (e.g., casual, midcore or hardcore10) or genre ( e.g., action,  adventure, role -
playing games, sport  strateg y, resource management, etc.11). However, t he 
Commission considered that f rom a supply -side perspective, the same company can 
create games of many different types . Fro m a demand -side perspective, distinctions 
between game type or genre were not followed by players and could therefore not be 
made accurately.12 The Commission reached the same conclusion in 
Vivendi/Activision , where it noted that “ from a demand -side perspective, most 
gamers appear to buy games across several game genres ” and “ from a supply -side 
perspective, publishers appear generally to publish games across multiple genres ”.13 
Further, the Commission added that a distinction by genre was “ subjective ”, as there 
were “games with multi -types of gaming activity inside the same game ”.14 
(12) The Commission ultimately left the product market definition open.15 
4.1.1.2.  The Notifying Party’s views  
(13) The Notifying Party submit s that video games developed for PCs and consoles are 
increasingly substitutable, while native mobile games remain distinct.16 The 
Notifying Party argues that games developed for PCs and consoles require greater 
investment in money, time, and resources ( i.e., marketing).17 Moreover, the 
                                                 
7  Commission decision of 12 February 2016 in c ase M.7866  - Activision Blizzard/King , paragraph  26. 
8  Commission decision of 12 February 2016 in c ase M.7866  - Activision Blizzard/King , paragraph  20. 
9  Commission decision of 12 February 2016 in c ase M.7866  - Activision Blizzard/King , paragraph  22. The 
Commission has also considered in its decisions concerning antitrust cases AT.40413 - Focus Home, 
AT.40414 - Koch Media, AT.40420 – ZeniMax, AT.40422 – Bandai Namco and AT.40424 – Capcom  
(decisions of 20 January 2021, paragraphs 62 -66 and 77 -79; a publ ic version of the decision is not yet 
available)  […]. 
10  Commission decision of 12 February 2016 in case M.7866 – Activision Blizzard/King, Table 1. Casual, 
midcore and hardcore games describe different types of gamers considered in this case , with increas ing 
differences in terms of difficulty, strategic thinking and time commitment.  Casual games include simple 
game mechanics ( i.e., puzzle games), engaging the player in shorter yet more frequent periods of time, 
with no special skills required. Midcore game s are more engaging game concepts, requiring strategic 
thinking. Hardcore games are very engaging game concepts that retain players, usually requiring prior 
gaming experience.  
11  Commission decision of 12 February 2016 in case M.7866 – Activision Blizzard/King, paragraph 16. 
Action, adventure, role -playing, sport, strategy, and resource management games describe possible 
segmentations according to different game genres considered in  this case .  
12  Commission decision of 12 February 2016 in case M.7866  - Activision Blizzard/King , paragraph  24. 
13  Commission decision of 16 April 2008 in case M.5008  - Vivendi/Activision , paragraph 23.  
14  Commission decision of 16 April 2008 in case M.5008  - Vivendi/Activision , paragraph 23.  
15  Commission decision of 12 February 2016 in c ase M.7866  - Activision Blizzard/King , paragraph s 26-27 
and Commission decision of 16 April 2008 in case M.5008  - Vivendi/Activision , paragraph 25.  
16  Form CO, paragraph 189. 
17  Form CO, paragraph 191.  
 
 
5 Notifying Party subm its that the difference between games for PCs and consoles will 
continue to diminish , as the majority of games published by the Parties and other  
independent game publishers are launched for both PCs and consoles. Lastly, the 
Notifying Party argues that th e introduction of subscription services will continue to 
erode the differences between games published for PCs and consoles.18 
(14) The Notifying Party also argue s that a distinction by game type or genre would not 
properly reflect the dynamics of the industry. It indicate s that distinctions by genre 
or type are not followed by players, and therefore  cannot be accurately made. In the 
Notifying Party’s view, most players buy games across several game genres (as well 
as multiple games within the same genre) and a s ignificant number of players would 
switch to other genres of games in response to a significant price rise. In addition, 
from a supply -side perspective, a publishing  studio can create many different types 
of games.  Lastly, the Notifying Party submits that it is inherently difficult to classify 
games into discrete genres and types.19 
(15) The Notifying Party argue s that the exact scope of the relevant product market  can 
be left open, given that the Transaction would  not raise concerns  as to its 
compatibility with the internal market  under any of the plausible alternative market 
definitions  assessed for the purpose  of this decision .20 
4.1.1.3.  The Commission’s assessment  
(16) The results of the market investigation are inconclusive regarding a possible 
segmentation of the video ga me publishing product market by platform (PC, 
console, and mobile). In particular, the market investigation produced no clear 
support for segmenting the relevant market according to the three platforms or for 
considering mobile games as distinct from games  published for PCs and consoles .21  
(17) In light of the se results, the exact market delineation can be left open. For the 
purpose of the present decision, video games publishing (i) for PCs, (ii) for consoles, 
and (iii) for mobile devices , as well as (iv) for a broader market for video games 
publishing regardless of the platform  will be  considered to constitute four potential 
relevant product markets .  
(18) The results of the market investigation are also inconclusive regarding  a possible 
distinction between dif ferent genres of video games . Amongst video game 
publishers and distributors  (including both physical and digital distributors) , there is 
no clear majority supporting either a segmentation according to genres or supporting 
that, despite different genres, o ne single relevant product market exists.22  
(19) Therefore, for the purpose of this decision, the exact definition of the relevant 
product market will be left open. The effects of the Transaction will be assessed  both 
                                                 
18  Form CO, para graphs  192-193. 
19  Form CO, paragraph  194. 
20  Form CO, para graph  200. 
21  Q1 – Questionnaire to market participants in the video gaming industry , replies to question 9.  
22  Q1 – Questionnaire to market participants in the video gaming industry , replies to question 10.  
 
 
6 under the assumption that video game genres23 may const itute possible distinct 
market segments , or that they form  one overall video games publishing market .  
(20) Further, t he results of the market investigation are  inconclusive regarding a possible 
segmentation of publishing by game type .24 Therefore, for the purpose of this 
decision, the exact definition of the relevant product market will be  left open. The 
effects of the Transaction will be assessed under the assumption  that the video game 
types identified by the Notifying Party ( AAA, casua l, stand -alone, browser, free -to-
play, freemium, and social network25) may constitute potential distinct market 
segments , or that they form  one overall video games publishing market .  
(21) In any event, the exact delineation of the relevant product market can  be left open for 
the purpose of this decision , as the Transaction does not raise serious doubts as to its 
compatibility with the internal market  or the functioning of the EEA Agreement  
under any of the plausible product market definitions considered.  
 Relevant geographic market  
4.1.2.1.  The Commission’s  previous  practice  
(22) As regards the geographic scope  of any of the plausible product market definitions 
considered in section 4.1.1.3 , in previous decisions, the Commission has considered 
the market to be at least EEA -wide, if not worldwide , but ultimately left the 
geographic market definition open.26 
4.1.2.2.  The Notifying Party’s views  
(23) The Notifying Party submit s that the relevant markets are at least EEA -wide, if not 
worldwide , since (i) there are no material price differences across the EEA, (ii) the 
                                                 
23  According to the Notifying Party, games may be categorised by genre into strategy, simulation (such as 
sports, driving, construction, life, and social simulation), action (including fighting and shooter), 
adventure, role -playing, music and dance. However, genre -based categorisation is bound to be imprecise, 
due to the blurred nature of genre categories and the subjectivity involved (the Parties and industry experts 
do not always agree on genre categorisations). For completeness, the Parties do not consider that there are 
specific “children/kids” genres. See footnote 11. 
24  Q1 – Questionnaire to market participants in the video gaming industry , replies to question 11.  
25  According to the Notifying Party, games may be categorised by type into AAA, casual, stand -alone and 
browser games, free -to-play and freemium games, as well as social network games. AAA games are 
developed by large development studios requiring significant budgets over extended periods. Casual 
games target a mass audience, are relatively simple, and less costly to develop. Stand -alone games are 
installed as separate applications on gaming device, and may be played without connecting to the internet. 
Browser games run directly in the web browser, using standard technologies for interactive multimedia. 
Free-to-play games are free for the player to acquire, and generally advertising -funded. Freemium games 
offer basic game -play that is free,  but certain aspects of play may require purchases. Social network games 
use capabilities of social network services, are generally casual games and may be played individually or 
as multi -player.  
26  Commission decision of 16 April 2008 in case M.5008  - Vivendi/Activision , paragraph 29 and 
Commission decision of 12 February 2016 in case M.7866 - Activision Blizzard/King,  paragraphs 31 -32. 
In its decisions in the antitrust cases AT.40413 - Focus Home, AT.40414 - Koch Media, AT.40420 – 
ZeniMax, AT.40422 – Band ai Namco and AT.40424 – Capcom   (decisions of 20 January 2021, paragraphs 
7-76 and 77; published public version of the decision is not yet available)  […]. 
 
 
7 same publishers compete across the EEA, and (iii) digital distribution channels are 
available across all EEA juri sdictions.27 
(24) The Notifying Party argue s that the exact scope of the relevant geographic  market s 
can be left open, given that the Transaction would  not raise concerns  as to its 
compatibility with the internal market  under any of the plausible market definiti ons 
assessed for the purpose of this decision .28 
4.1.2.3.  The Commission’s assessment  
(25) The market investigation has confirmed that the geographic scope of any of the 
plausible product market definitions considered in section 4.1.1.3  is at least EEA -
wide , possibly worldwide .   
(26) A majority of distributors consider that the overall market for video games 
publishing should be worldwide  in scope  because , in particular,  there are no 
significant price differences, and many publishers typically produce one version of a 
video game for distribution worldwide.  This is confirmed by a majority of publishers 
who indicated that they develop video games for distribution in all geographies, 
which are then (possibly) localised for specific regions.29 However,  only a minority 
of game publishers responded  that the relevant geographic market should be 
worldwide . The se diverging views between publishers and distributors also remain if 
the replies are bro ken down by platform (mobile games , PC games , and console 
games).30  
(27) On this basis, the Commission considers that, for the purpose of this decision, it is 
appropriate to consider both an EEA -wide relevant geographic scope and a 
worldwide  relevant geographic  scope for any of the plausible product market 
definitions considered in section 4.1.1.3 . 
(28) In any event, the exact delineation of the relevant geographic  market can b e left open 
for the purpose of this decision , as the Transaction would not raise serious doubts as 
to its compatibility with the internal market or the functioning of the EEA 
Agreement under any of the plausible geographic  market definitions considered.  
4.2. Game distribution  
(29) Game distribution refers to the distribution of games to the public in either physical 
or digital form . In the case of physical distribution, games are distributed on physical 
media like cartridges  and compact discs , and sold online (e.g., via the Microsoft 
Store, Apple App Store, and Google Play Store) or in brick -and-mortar  stores . In the 
case of digital distribution, games are distributed through  online download  and/or 
streaming , e.g., as concerns Microsoft, accessed via the Microsoft S tore (on 
Windows PCs), Xbox Store ( now know n as the Microsoft Store, on the Xbox 
Console), Xbox Game Pass (Ultimate), and Xbox Live.   
                                                 
27  Form CO, para graph 199. 
28  Form CO, para graph  200. 
29  Q1 – Questionnaire to market participants in  the video gam ing industry , replies to question 14 -14.1.  
30  Q1 – Questionnaire to market participants in the video gam ing industry , replies to question 13.  
 
 
8 
 Relevant product market  
4.2.1.1.  The Commission’s previous practice  
(30) In its decision in the case Vivendi/Activision , the Commission considered  a possible 
relevant product market for physical wholesale game distribution.31 
4.2.1.2.  The Notifying Party’s views  
(31) The Notifying Party considers that the Commission’s decisional practice in relation 
to video games distribution does not provide clear indi cations a s to the definition of 
the relevant market. Instead, it relies on the decisional practice in the area of physical 
and digital distribution of recorded music. The Notifying Party consider s that these  
decisions are instructive for the distribution o f video games, because , in their view , 
game distribution is undergoing the early stages of a transformation similar to that 
seen in the music and video  industries , i.e., a shift from physical sales toward s digital 
distribution, and within digital, from dow nload  to streaming.32 On this basis, the 
Notifying Party submit s the following arguments.  
(32) The Notifying Party refers to  Universal Music Group/EMI Music, Sony/BMG and 
Access/PLG , explaining  that, like for music, physical and digital games distribution  
could  fall into distinct relevant product markets, given the differences in pricing and 
characteristics.33 The Notifying Party also notes that in Vivendi/Activision , the 
Commission pointed to the different pricing mechanism s for online games (monthly 
subscriptio n fees) as opposed to offline games (buy -to-play).34 
(33) The Notifying Party further  submits that , in contrast to the physical distribution of 
games, digital distribution provides players with immediate access to games, which 
cannot be lost or destroyed.35 In te rms of characteristics, the Notifying Party also 
point s to the accessibility and storage of physical buy -to-play games (similar to 
books) as opposed to digital games.36 Lastly, the Notifying Party points to the 
difference in the supply chain of physical and  digital distribution, highlighting that a 
shorter supply chain for digital distribution, makes the cost of digital distribution 
lower.37 The Notifying Party concludes that , given the difference s in pricing and 
characteristics , physical and digital distribution fall into two distinct product 
markets .38  
                                                 
31  Commission decision of 16 April 2008 in case M.5008  - Vivendi/Activision, paragraph s 39-40. The 
Commission has also considered the aspect of PC video game distribution in its decisions  concerning 
antitrust cases AT.40413 - Focus Home, AT.40414 - Koch Media, AT.40420 – ZeniMax, AT.40422 – 
Bandai Namco, and AT.40424 – Capcom (decisions of 20 January 20 21, para graphs  67-71; a published 
public version of the decision is not yet available) . […]. 
32  Form CO , paragraph  232. 
33  Form CO, paragraph 234. Commission decision of 3 October 2007 in case M.3333 - Sony/BMG , recital 
27, Commission decision of 21 September 2012 in case M. 6458 - Universal Music Group/EMI Music , 
recital 128 and Commission decision of 14 May 2013 in case M.6884 - Access/PLG , para graph  13. 
34  Form CO, paragraph 243. Commission decision of 16 April 2008 in case M.5008  - Vivendi/Activisi on, 
paragraph  12.  
35  Form CO, paragraph 258.  
36  Form CO , paragraph  260. 
37  Form CO, paragraph 261.  
38  Form CO, paragraph 257.  
 
 
9 (34) Regarding digital distribution, the Notifying Party submits that digital storefronts 
and app stores through which PC and console video games are distributed, all fall 
into the sa me relevant product  market .39 As native mobile games are distributed 
through mobile application stores, the Notifying Party submit s that mobile app stores 
fall into a distinct relevant product market.40 Lastly,  the Notifying Party submits that 
a segmentation  of digital distribution with reference to  the payment model  (purchase 
or subscription ), or between download and streaming  of games  is not warranted. 41  
(35) Overall, t he Notifying Party submit s that the distribution of games in physical and 
digital form could likely fall into two separate product markets, with no further 
segmentation.42  
(36) The Notifying Party argue s that, in any case,  the exact scope of the relevant product  
market can be left open, given that the Transaction would not raise concerns as to its 
compatibility with the internal market under any of the plausible market definitions 
assessed for the purpose of this decision.43 
4.2.1.3.  The Commission’s assessment  
(37) The market investigation has provided inconclusive results with respect to a possible 
segmentation of video game distribution by physical and digital distribution .44 While 
a majority of publishers indicate that a game developer can easily switch between 
developing vid eo games for physical and digital distribution channels, this is not 
supported by the distributors ’ replies  to the market investigation .45 
(38) On this basis, the Commission considers that, for the purpose of  this decision, it will 
conduct its  competitive assess ment on both (i) a potential single distribution market, 
and (ii) two hypothetically  separate  markets  for physical  distribution (online and 
“brick -and-mortar” retailers)  and digital distribution  (online download/streaming via 
digital storefronts, app stores and subscription services) . 
(39) As regards a possible segmentation of digital distribution by platforms for which 
games are developed  (PC, console, and mobile devices) , the market investigation ha s 
also provided inconclusive results, as there is no majority amongst neither publishers 
nor distributors supporting or rejecting  such a segmentation.46 
(40) On this basis , for the purpose of this decision, the exact definition of the relevant 
product market will be left open. The effects of the Transaction will therefore be 
assessed under the assumption  that the platforms for which games are developed  
may const itute potential distinct market s, as well as under the assumption of the 
existence of  an overall distri bution market . 
                                                 
39  Form CO, para graph  264. 
40  Form CO, para graph  266. 
41  Form CO, para graph s 273 and 284.  
42  Form CO, para graph  257. 
43  Form CO, paragraph  287. 
44  Q1 – Questionnaire to market participants in the video gam ing industry , replies to question 15.  
45  Q1 – Questionnaire to market participants in the video gam ing industry , replies to question 16.  
46  Q1 – Questionnaire to market participants in the video gam ing industry , replies to question 17.  
 
 
10 (41) As regards a possible segmentation of a hypothetical digital distribution market 
based on the payment model (upfront payment vs. subscription), t he results of the 
market investigation indicate that such a segmentation is not warranted , in particular 
because digital payment models to a large extent are interchangeable.47 Similarly,  the 
results of the market investigation  do not support segmenting the hypothetical  digital 
distribution market by types of players’ access (download vs. stream ing). A large 
majority of respondents in the market investigation indicated that such a 
segmentation is not appropriate  in particular because different access does not 
influence the players’ purchasing behaviour and choices.48 On this basis, for the 
purpose of this decision, the Commission will not distinguish different segment s in 
the digital distribution market , based on the payment model and on the types of 
access.  
(42) In any event, the exact delineation of the relevant product market can be left open for 
the pu rpose of this decision , as the Transaction would not raise serious doubts as to 
its compatibility with the internal market  or the functioning of the EEA Agreement  
under any of the plausible product market definitions considered.   
 Relevant geographic marke t 
4.2.2.1.  The Commission’s  previous  practice  
(43) As regards the potential market for physical game distribution, in Vivendi/Activision , 
the Commission stated that, considering the results of the market investigation in 
that case , “the markets for wholesale game distribution and logistic services tend  to 
be national in scope ”.49  
(44) In the market investigation in Activision Blizzard/King  (which did not focus on the 
distribution markets ), a respondent indicated that gaming became a worldwide 
industry  with the advent of digital content distribution.50  
4.2.2.2.  The Notifying Party’s views  
(45) In relation to the market for physical game distribution, the Notifying Party submit s 
that, similarly to the Commission’s findings in the music industry  in 
Apple/Shazam ,51 the market should be a t least national.52 
(46) In relation to the market for digital game distribution, the Notifying Party consider s 
that the market is at least EEA -wide, if not worldwide  in scope . It argues that  there 
are no material price differences within the EEA,  that the same game publishers 
                                                 
47  Q1 – Questionnaire to market participants in the video gam ing industry , replies to question 18 -18.1. 
48  Q1 – Questionnaire to market participants in the video gam ing industry , replies to question 19 -19.1.  
49  Commission decision of 16 April 2008 in case M.5008  - Vivendi/Activision , paragraph  42. 
50  Commission decision of 12 February 2016 in c ase M.7866  - Activision Blizzard/King , paragraph  30. In its 
decisions concerning antitrust cases AT.40413 - Focus Home, AT.40414 - Koch Media, AT.40420 – 
ZeniMax, AT.40422 – Bandai Namco, and AT.40424 – Capcom  (decisions of 20 January 2021, paragraphs 
72-79; a public version of the decision is not yet available)  […]. 
51  Commission decision of 6 Septem ber 2018 in case M.8788 - Apple/Shazam , paragraph 19 .  
52  Form CO, para graph  285. 
 
 
11 compete across the EEA , and that the same digital distribution channels are available 
anywhere in the world without cross -border restrictions.53  
(47) In any event, the Notifying Party consider s that the exact scope of the geographic 
market can be left open given that the Transaction would not raise competition 
concerns under any of the alternative market definitions.54 
4.2.2.3.  The Commission’s assessment  
(48) The market investigation confirmed that the geogra phic scope of physical and digital 
game distribution  is at least EEA -wide . 
(49) Both (i) game publishers and (ii) distributors  that participated  in the market 
investigation indicated that the relevant geographic market, including both physical 
and digital distr ibution, should be at least EEA -wide in scope. Only  a small number  
of respondents  indic ated that the relevant geographic market should be national.  
Distributors even support ed defining  a possible worldwide  market, in particular  
concerning digital distribution .55 
(50) On this basis, the Commission considers that for the purpose of this decision, it is 
appropriate to consider both an EEA -wide and a worldwide  relevant geographic for 
the overall market for video games distribution , as wel l as any possible market  
definitions as  outlined in section 4.2.1.3 . 
(51) In any event, the exact delineation of the relevant geographic market can be left open 
for the pu rpose of this decision , as the Transaction would not raise serious doubts as 
to its compatibility with the internal market  or the functioning of the EEA 
Agreement  under any of the plausible geographic market definitions considered.  
5. COMPETITIVE ASSESSMEN T 
5.1. Analytical framework  
(52) Article 2 of the Merger Regulation requires the Commission to examine whether 
notified concentrations are compatible with the internal market, by assessing whether 
they would significantly impede effective competition in the internal market or in a 
substantial part of it, in particular through the creation or strengthening of a 
dominant position .56 
(53) Vertical relationships involve companies operating at different levels of the supply 
chain. There are two main ways in which vertical  merger s may significantly impede 
effective competition: input foreclosure and customer foreclosure.57  
                                                 
53  Form CO , paragraph  286. 
54  Form CO , paragraph  287. 
55  Q1 – Questionnaire to market participants in the video gam ing industry , replies to question 21.  
56  With regard to the  application of the Merger Regulation in the EEA, see Annex XIV to the EEA 
Agreement.  
57  Guidelines on the assessment of non -horizontal mergers under the Council Regulation on the control of 
concentrations between undertakings ("Non -Horizontal Merger Guide lines"), OJ C 265, 18.10.2008.  
 
 
12 (54) Input foreclosure may raise  competition problems only if it concerns an important 
input for the downstream market, and if the combined  entity has a significant degree 
of market power upstream.58 In assessing the likelihood of an anticompetitive input 
foreclosure strategy, the Commission examine s: (i) whether the combined  entity 
would have the ability to substantially foreclose access to inputs; (ii) whether it 
would have the incentive to do so; and (iii) whether a foreclosure strategy would 
have a significant detrimental effect on competition downstream.  
(55) For a transaction to raise customer foreclosure competition concerns, the combined  
entity must be an important c ustomer with a significant degree of market power in 
the downstream market.59 In assessing the likelihood of an anticompetitive customer 
foreclosure strategy, the Commission examine s: (i) whether the combined  entity 
would have the ability to foreclose acces s to downstream markets by reducing its 
purchases from upstream rivals; (ii) whether it would have the incentive to do so ; 
and (iii) whether a foreclosure strategy would have a significant detrimental effect 
on consumers in the downstream market.  
5.2. Identific ation of affected markets  
(56) Microsoft and ZeniMax are  active in the market (s) for game software publishing  for 
PCs, consoles and mobile devices, across video game genres and types. Further, 
Microsoft is also active in the market (s) for physical and digital video game 
distribution for PCs and  consoles .60 As set out in paragraph (8) above, and taking 
into account all plausible product market defi nitions in sections 4.1.1.3  and 4.2.1.3 , 
the Transaction gives rise to one  affected market , namely  the operation of digital 
storefronts selling console games in digital form , where Microsoft is active  (see 
paragraph (59) below) . 
(57) First, t he Transaction does not give rise to any  affected  conglomerate relationships , 
given the Parties’ generally limited market shares . Furthermore, Zeni Max is not 
active in a market “closely related” to the operation of digital storefronts selling 
console games in digital form, where Microsoft holds a market share in excess of 
30%.  
(58) Second, t he Transaction involves no horizontal ly affected markets . While both 
Microsoft and ZeniMax are active as game publishers and licensors of rights for 
game -related merchandising , the Parties’  combined shares in all markets where both 
Parties are active are limited, and in any event below 20% under any product and 
geographic delineation considered .  
(59) Third, the Transaction gives rise to a vertical  relationship , which involves an 
affec ted market at the downstream level . The identified vertical relationship  consist s 
of: (i) upstream: the publishing of console games in digital form61 in the EEA  
(Microsoft: [0-5]%, ZeniMax: [0-5]%, in 2019 ); and (ii) downstream: the operation 
of digital storefronts selling console games in digital form in the EEA  (Microsoft: 
                                                 
58  Non-Horizontal Merger Guidelines, paragraphs 34 -35. 
59  Non-Horizontal Merger Guidelines, paragraph 58.  
60  For ZeniMax’s distribution activities, see footnote 6 above.  
61  Although we consider that there may be a wider video game publishing market regardless of whether 
these games are in digital or physical form (see paragraph (21) above), the present competitive assessment 
will focus on digital games given that physical games are irrelevant for the identified vertical relationship.  

 
 
14 digital console video games on its downstream console platform, i.e., the Microsoft 
and Xbox Store; and (ii) partial foreclosure of rival publishers of c onsole video 
games through for instance, an increase in distribution fees or a degradation of the 
terms and conditions under which Microsoft is willing to sell these rival games on its 
console platform.  
5.2.2.1.  Ability to engage in customer foreclosure  
(A) The Notifyi ng Parties’ views  
(64) The Notifying Party submits that post -Transaction , Microsoft will not have the 
ability to prevent rival game publishers from selling through the Microsoft console -
specific digital storefronts.  
(65) First, the combined entity’s share of game p ublishing (however defined) will be very 
small. At the same time, most prominent new releases of video games are third -party 
games, and a console needs to offer such games in order to attract gamers. Therefore, 
Microsoft will need to continue to rely on th ird-party games to provide the vast 
majority of its Xbox content.65 
(66) Second, the Notifying Party argues that third -party publishers have [console 
platform’s negotiation with publishers]  leverage during negotiations with console 
platforms. Rival consoles comp ete intensely to bring newly released games to their 
consoles first, as doing so makes their console more attractive to players. In addition, 
the emergence of new gaming platforms from large firms such as Google, Amazon, 
and Facebook are only increasing th e publishers’ negotiating power, as they can look 
to many other platform providers for more attractive terms.  
(67) In particular, the Notifying Party considers that, [forecast of Xbox’s performance] . If 
Microsoft were to try and restrict access or worsen terms  with third -party publishers, 
these publishers could fully or partially switch to rival consoles, rendering the 
strategy self -defeating.66 
(68) Therefore, the combined entity would not have the ability to foreclose rival game 
publishers from selling through the Microsoft console -specific storefronts.  
(B) The Commission’s assessment  
(69) While Microsoft could technically implement a customer foreclosure strategy, the 
Commission considers that the combined entity will not have the ability to engage in 
a successful customer  foreclosure strategy since there appear to be sufficient 
economic alternatives in the downstream market for upstream rivals to sell their 
output.  
(70) Market shares indicate that Microsoft, through the Xbox console platform , is an 
important distributor of con sole video games in the EEA with [30-40]% (for 2019, 
see Table 1 above) of the digital console video game distribution market (digital 
storefronts only).  Microsoft’s main competitors in the digital distribution of console 
video games in the EEA (limited to digital storefronts) are Sony ( [50-60]%, in 2019) 
                                                 
65  Form CO, paragraph 440.  
66  Form CO, paragraph 440.  
 
 
15 via the PlayStation console platform and Nintendo ( [5-10]%, in 2019) via the Switch 
console platform.67 However, despite the importance of Microsoft as a distributor of 
console video games, the Commission concludes that Microsoft would not have the 
ability to foreclose rival publishers by ceasing to distribute third -party content and 
exclusively relying on the content of ZeniMax post -transaction or deteriorating the 
conditions under which Microsoft would distribute third -party console titles.  
(71) First, as also addressed in paragraph (93) below , ZeniMax has a very limited market 
position in the EEA (2019) with regards to the publishing of digital console video 
games ( [0-5]% market share) and the Parties together do not have more than [0-5]% 
(see Table 1). It will therefore not be possible for Microsoft to exclusively rely on the 
combination of ZeniMax’s console video game content and its own content for 
distribution in the  EEA.  
(72) This was confirmed by several video game publishers and distributors who 
emphasized the size of the video game publishing market and the strength of 
Microsoft and ZeniMax’s rival game publishers’ intellectual property, which 
represents attractive content for game distributors.68 
(73) Second, the results of the market investigation indicate that the majority of video 
game publishers considered that there are other (strong) players to which they could 
license their content as an alternative to the Parties in the event that Microsoft would 
cease acquiring their video game content or otherwise degrade the terms on which it 
acquires their content. Further, publishers confirmed that it is normal business 
practice to develop games across all possible distributio n channels and platforms.69 
No respondents considered that there are no alternative licensors for their content.70 
[Microsoft’s negotiation strategy with publishers] .71 72 
(74) Furthermore, the majority of publishers confirmed that the Transaction would not 
affect their bargaining power in negotiations with Microsoft to se ll console games 
via the Microsoft console platform.73 Only two third -party publishers considered that 
Microsoft’s bargaining power would increase post -Transaction, however one of 
these respondents clarified that “ the sole acquisition of ZeniMax would be 
insufficient to tip Microsoft’s bargaining power to lev els raising concern. ” 
(75) Third, as set out in paragraph (119) , a material proportion of console video game 
players multi -home and own multiple consoles or play games on  both PC and 
                                                 
67  Form CO, Table 32.  
68  For example, see also Commission decision of 12 February 2016 in c ase M.7866  - Activision 
Blizzard/King , paragraph  53 in which respondents point to “ a very large number of publishers capable of 
developing and marketing games whose success will depend on the quality of their games ”. 
69  Q1 – Questionnaire to market participants in the video gaming industry, replies to question 30.  
70  Q1 – Questionnaire to market participants in the video gaming industry, replies to question 29 . 
71  Form CO, paragraphs 484 -485: for a game developer/publisher to d istribute a game on any console , they 
must negotiate the distribution terms with the relevant console platform . The consol e platform  pays a 
revenue share to the third -party developer/publishers.   
72  Form CO, paragraph  486 and Memorandum  of 3.2.2021.   
73  Q1 – Questionnaire to market participants in the video gaming industry, replies to question 32 . 
 
 
16 console74 which further underlines the fact that console video game publishers have 
multiple distribution options.  
(76) Overall, video game publishers that responded to the market investigation have not 
raised concerns regarding Microsoft ceasing t o acquire content from them or 
otherwise degrading the terms on which it does so. Third parties did not consider 
that ZeniMax video games were significant enough for a (partial) customer 
foreclosure strategy to be profitable.75 
(77) Therefore, for the reasons se t out above, the Commission concludes that the 
combined entity would not have the ability to foreclose rival console video game 
publishers by engaging in a total or partial customer foreclosure strategy.  
5.2.2.2.  Incentive to engage in customer foreclosure  
(A) The Noti fying Parties’ views  
(78) The Notifying Party submits that post -Transaction, Microsoft will not have the 
incentive to prevent rival game publishers from selling through the Microsoft 
console -specific digital storefronts.  
(79) The Notifying Party argues that it woul d be self -defeating for any console 
manufacturer to limit or restrict rival game publishers from selling through 
Microsoft console -specific digital storefronts. It explains that having a broad range 
of attractive games is the single most important factor f or driving the success of a 
console, such that any policy undermining the availability of third -party games 
would be commercially irrational.76   
(80) According to the Notifying Party, the imperative to attract third -party content is 
underlined by the outcome of  the last two console generations. [Microsoft’s 
performance] . Industry experts have also confirmed the correlation between a 
console’s performance and the amount of attractive gaming content it can offer 
compared to its rivals.77 Therefore, any strategy res tricting third -party publishers’ 
access to the Xbox would only push publishers to spend less time developing games 
for the Xbox, and more time developing exclusive content for other devices. This in 
turn would reduce Xbox’s appeal to players and publishers . Therefore, Microsoft is 
highly incentivised to continue to rely on third -party games to provide content.78 
(81) Therefore, the combined entity would not have the incentive  to foreclose rival game 
publishers from selling through the Microsoft console -specific s torefronts.  
                                                 
74  Form CO, paragraph 500, F igure 11 and Q1 – Questionnaire to market participants in the video gaming 
industry, replies to question 26 . 
75  Q1 – Questionnaire to market participants in the video gaming industry, replies to question 38 . 
76  Form CO, paragraph 440.  
77  Segmentnext.com, PS4 has officially won this console generation , 26.4.2019 .   
78  Form CO, paragraph 440.  
 
 
17 (B) The Commission’s assessment  
(82) The Commission considers that Microsoft would not have the incentive to foreclose 
access to downstream markets by reducing purchases or purchasing at inferior 
conditions from upstream competing rivals for the follow ing reasons.  
(83) As the Notifying Party argues, rich and differentiated content is key to a console’s 
ability to attract, engage and retain players.79  
(84) Several internal documents and industry reports confirm this premise. A recent IDG 
Consulting annual whitepa per (2020) thus notes that “ [c]ontent in gaming remains 
the paramount success factor. Without great differentiated content, a game platform 
cannot survive .”80 The paper further points out that the most p opular game titles 
(such as “GTA V”, “Assasin’s Creed” , “Zelda”, “Final Fantasy”, “Pokemon”, 
“FIFA”, etc.) also attract a certain amount of brand loyalty, i.e., “these brands exert 
a significant amount of influence over consumer behaviour and loyalty over time ”.81 
These top console and PC franchises do not inc lude ZeniMax titles (see also 
paragraph (104)  below ). A Microsoft presentation to the Board (2020) further states 
that, [Xbox’s business strategy] .82 
(85) The majority of respondents to the market investigation confirmed that Microsoft 
would not have the incentive to prevent rival publishers from selling through the 
Microsoft console platform.83 None of the respondents considered that Microsoft 
would have the incentive to en gage in a partial or total customer foreclosure strategy 
as “[t] here is no interest for Microsoft to restrict access to its platform for third 
party publishers. Quite the opposite actually ”.84   
(86) Instead, a large majority of respondents, including rival cons ole platforms Sony and 
Nintendo, confirmed that holding a broad range of (differentiated) content 
constitutes one of the drivers of success of a digital distribution channel.85 For 
instance, a video game distributor explained that “[…] the content is very i mportant 
for the consumer to decide for a platform or console. The platform with the most and 
best games (for a reasonable price) will be the market leader ”.86  
(87) Accordingly, as noted above, the Commission considers that the combined entity 
will continue to have an incentive to carry a broad range of the most attractive 
content on its platform.  
(88) Therefore, for the reasons set out above, the Commission concludes that the 
combined entity would not have the incentive to foreclose rival console video game 
publish ers by engaging in a total or partial customer foreclosure strategy.  
                                                 
79  Commission decision of 16 April 2008 in case M.5008  - Vivendi/Activision , paragraph  67.  
80  Form CO, Annex 9, IDG Consulting, State of the games industry 2020 Annual  White Paper, 13 .4. 2020 , 
slide 28.  
81  Form CO, Annex 9, IDG Consulting, State of the games industry 2020 Annual White Paper, 13 .4. 2020 , 
slide 28.  
82  Form CO, Annex 3, Microsoft Present ation to the Board of Microsoft, August 2020 , slide 2.  
83  Q1 – Questionnaire to market participants in the video gaming industry, replies to question 28.  
84  Q1 – Questionnaire to market participants in the video gaming industry, replies to question 28.  
85  Q1 – Questionnaire to market participants in the video gaming i ndustry, replies to question 2 4. 
86  Q1 – Questionnaire to market participants in the video gaming industry, replies to question 2 4. 
 
 
18 (C) Impact on effective competition  
(89) Given the existence of multiple alternatives to Microsoft, to which video game 
publishers can supply their content, rival console video game publishers wou ld not 
likely be deprived of an essential customer, and could still rely on multiple 
alternative distribution channels.  
(90) This conclusion is consistent with the results of the market investigation. The large 
majority of participants considered that the Tran saction ’s impact on the publishing 
market would be neutral. One respondent clarified that “ [t]here is a high level of 
competition in the market for game development and publishing with numerous 
competitors active on the market. […] [L]arge publishers typic ally take a broad 
approach whilst others may be more specialised in the types of games they publish, 
and many publishers are active across different devices, publishing games, which 
are interchangeable from the consumer perspective. All games compete for a vailable 
consumer funds and consumers can readily switch between mobile, PC and console 
games. ”87 
(91) In light of the above, the Commission finds that a potential (partial or total) customer  
foreclosure strategy would not have a material effect on competition i n the EEA.  
5.2.2.3.  Conclusion  
(92) In light of the above, the Commission concludes that the Transaction does not raise 
serious doubts as to the compatibility with the internal market under any of the 
considered alternative product markets for game distribution, either at the EEA - or 
worldwide levels.  
 Foreclosure of rival console video game distributors by foreclosing access to 
ZeniMax digital console video games (input foreclosure)  
(93) The combined entity ’s market share in the upstream market for the publishing of 
console games in digital form is very limited,  amounting to [0-5]% in the EEA  in 
2019 .88 Worldwide, the combined  entity’s market share in the overall console game 
publishing market in the same year is [0-5]%.89 Downstream , the combined entity 
has a market share of [30-40]% (2019) in the market segment of digital distribution 
of console video games via digital storef ronts in the EEA . 
(94) Despite the combined entity’s limited market shares upstream, the Commission 
notes that ZeniMax, as specified below, publishes some gam e franchises that are 
popular among players. The Commission further notes  that content plays a 
prominent role in the video gam ing industry . The Commission has therefore assessed 
the risk of: (i) total foreclosure of rival console video game distributors by  
foreclosing access to  some o r all of ZeniMax  digital console video games; and (ii) 
partial foreclosure of rival console video game distributors  through a degradation of 
the terms and conditions under which ZeniMax digital console video games are 
made avai lable for rival console s. 
                                                 
87  Q1 – Questionnaire to market participants in the video gaming industry, replies to question 3 8. 
88  See Table 1 above.  
89  Form CO, T able 13.  
 
 
19 5.2.3.1.  Ability to engage in input foreclosure  
(A) The Notifying Parties’ views  
(95) The Notifying Party  submit s that it is implausible that ZeniMax’s content would 
enable Microsoft to foreclose rival console storefronts or other rival console 
distribution channels , as ZeniMa x’s content and market share  are not significant 
enough .90  
(96) First, the Notifying Party considers that both ZeniMax and Microsoft have a very 
modest combined market share in the publishing  market in the E EA, indicating that 
the Parties lack the upstream market power to implement a foreclosure strategy.91 In 
particular, Zeni Max’s market share  in the EEA  was less than [0-5]% in 2019.  The 
Notifying Party considers that, even if they were to engage in an exclusivity strategy 
concern ing ZeniMax games vis-à-vis other consoles, this would not raise any 
competition concerns, as ZeniMax ’s content is not sufficiently strong to tip 
downstream markets in favour of Microsoft.  
(97) Second , rival consoles (and console storefronts) such as Sony  and Nintendo  have 
access to a very large array of popular games.92 Sony and Nintendo also  have  many 
blockbuster  exclusive console games , some of which rank among the top -selling 
console games in Europe .93 In this regard, the Notifying Party  notes that no  ZeniMax  
games feature among the bestselling console games in Europe in 2018.  
(98) Third , the Notifying Party argues that Sony and Nintendo consoles (and their 
respective storefronts) are differentiated and have stronger market positions than 
Microsoft ’s Xbox , both at  EEA  and national levels. Moreover, Sony consoles in 
particular have accumulated significant brand loyalty.   
(99) Fourth, the Notifying Party argues that Sony and Nintendo have surpassed Microsoft 
in the old console generation.94 [Microsoft’s performance] .95 The Notifying Party 
concludes that ZeniMax games, even if exclusively available for the Xbox , could not 
weaken rival consoles  sufficiently to result in foreclosure.96 Therefore, in the 
Notifying Party’s view, Microsoft would not have the ability to successfully  engage 
in an input foreclosure strategy.  
(B) The Commission’s assessment  
(100)  While Microsoft could have the technical ability to implement an exclusivity 
strategy with regard to ZeniMax games vis-à-vis rival consoles, the Commission 
                                                 
90    Form CO, paragraphs  445–455.  
91    Form CO, paragraph  452.  
92    Form CO, paragraph 381.  
93    Form CO, paragraphs  446 – 447. Key Sony exclusives include blo ckbuster titles such as “God of War, 
“Spider Man”, “The Last of Us” and “Uncharted”. Key Nintendo exclusives on the other hand include 
several major game franchises, such as the “Super Mario”, “Zelda” and “Pokèmon ” franchises.    
94  Form CO, Tables 18 and 20. In 2019, Microsoft’s market share by revenues in the sale of console 
hardware was [10-20]% and [10-20]% globally and in the EU respectively. In the same year, global 
market shares of Nintendo and Sony were [30-40]% and [50-60]% respectively, while their EU market 
shares were [30-40]% and [50-60]% respectively.    
95   [Xbox’s performance] . 
96  Form CO, paragraph  449. 
 
 
20 considers that the combined en tity will not have the ability to engage in a successful 
input foreclosure strategy. In this regard, as mentioned above, the Commission has 
carried out such analysis under both scenarios of total and partial foreclosure.   
(101)  Console -specific storefronts are available exclusively to users of the respective 
console,  because the console manufacturer runs the storefronts through which 
players can purchase the related console games. This dynamic was confirmed by a 
publisher, which indicated that once video game pl ayers buy a certain console, they 
essentially become locked -in to that console’s ecosystem. Exclusive video games 
could therefore encourage the purchase of the relevant consoles.  
(102)  ZeniMax publishes popular game franchises (such as “The Elder Scrolls” and 
“Fallout”), which enjoy recognition by players. However, despite the commercial 
success of these titles, Microsoft would not have the ability to foreclose rival console 
distributors by refusing to make ZeniMax games available on rival consoles or 
degrading the terms under which these games are made available.  
(103)  First, market shares indicate that ZeniMax’s cont ent represents a very limited 
position in the upstream market in the EEA, with a lower than [0-5]% share of the 
digital video games publishing market (2019). Furthermore, the Parties combined 
represent a market share of [0-5]% (2019) in the EEA (see Table 1). The 
Commission therefore considers that the combined entity cannot be considered to 
hold a significant degree of market power in the video game s publishing market.  
(104)  Second, almost all respondents to the market investigation  confirmed that , despite 
the commercial success of  a number of ZeniMax games,97 the upstream publishing 
market  is highly competitive.98 The Parties face strong competition from many rival 
third -party publishers owning well -known game franchises , which represent 
attractive content for ga me distributors. These competitors include large developers 
such as  Electronic Arts (“Fifa” , “Need for Speed”), Nintendo (“Super Mario” , 
“Zelda”), Activision Blizzard (“Call of Duty”) , Take Two (“GTA V”) and Ubisoft 
(“Assasin’s Creed”) . For instance, 2018 data shows that no ZeniMax games feature 
among the 15 bestselling console games in Europe.99  
(105)  Third, exclusivity strategies are not uncommon  and have already been adopted by 
rival consoles, with video games that performed better than ZeniMax titles.100 Such 
exclusive games have contributed to drive the success of Nintendo and Sony 
consoles,101 which have a stronger market position compared to Microsoft’s Xbox.102 
In this regard, almost all respondents to the market investigation consider that 
Microsoft currently h olds the least attractive exclusive content compared to Sony 
                                                 
97  Q1 – Questionnaire to market participants in the video gam ing industry , replies to question 33. 
98  Q1 – Questionnaire to market participants in the video gaming industry, replies to question 22.  
99  Form CO, Figure 8.  
100  Form CO, Figure 8. PlayStation exclusives “God of War” and “Spider Man” ranked as the 6th and 3rd 
highest selling games in 2018 respectively. See also paragraph (97) and footnote 93 and above.  
101  Form CO, paragraph 440 and Parties’ reply to the RFI 2 of 14.1.2021, question 8. See also PS4 has 
officially won this console generation , 26.4.2019 (link available here); techradar.com:  Nintendo’s Switch 
success shows that gaming is about more than graphics , 5.3.2018 (link availab le here); and 
mynintendonews.com:  “15 Nintendo Switch exclusives in the Top 40 this weeks ” 11.1.2021 (link 
available here).   
102  See footnote 94 above.    
 
 
21 and Nintendo consoles.103 Exclusive games might influence the choice of a console 
especially at the stage of the initial console purchase . However,  once the choice has 
been made, players tend to remain loyal to their console, as also indicated in 
paragraph (120)  below.  In this regard,  a slight majority of respon dents to the market 
investigation pointed to the presence of some degree of player loyalty to the console 
brand.104 Publishers  generally indicate d that players tend to remain loyal to a brand 
once they choose it . Only a few respondents indicated that players  are neutral or not 
loyal . Therefore, it is unlikely that a significant number of current PlayStation and 
Nintendo console users would switch to the Xbox console as a result of an 
exclusivity strategy  in relation to ZeniMax’s games . The Commission consider s that 
these reasons further limit the combined entity’s ability to weaken the position of 
rival console distributors.  
(106)  Therefore, for the reasons set out above, the Commission concludes that the 
combined entity would not have the ability to foreclose rival  console video game 
distributors by engaging in a total or partial input foreclosure strategy.  
5.2.3.2.  Incentive to engage in input foreclosure  
(A) The Notifying Parties’ view  
(107)  The Notifying  Party  submit s that Microsoft has strong incentives to continue making 
ZeniMax games available for rival consoles ( and their related storefronts).105 
(108)  The Notifying Party  explains  that the profitability of a  strategy to make ZeniMax 
games exclusive to the Xbox console would depend on a trade -off between: (i) the 
value of attracting new players to the Xbox ecosystem; and (ii) the lost income from 
the sale of ZeniMax games for rival consoles (through the related storefronts).  In this 
regard, the Notifying Party  forecast s that a significant share of  ZeniMax games  sales  
will occur on rival consoles over the life cycle of the newly  released console 
generation .106 Based on such a trade -off, the Notifying Party submit s that a 
hypothetical console exclusivity strategy would be profitable only if  it led to a n 
increase in the number of Xbox users [forecast million]  over the next five years , 
corresponding to an increase in Xbox shipments [forecast percentage]  above the 
forecast level .107  
(109)  In the Notifying Party ’s view, it is implausible that Microsoft would achie ve such 
results. Firstly, the  Notifying  Party  consider s that such a strategy  is likely to be  
successful if service dif ferentiation is  weak and the content at issue  is extremely 
                                                 
103  Q1 – Questionnaire to market participants in the video gaming industry , replies to question  36. 
104  Q1 – Questionnaire to market participants in the video gam ing industry , replies to question 27.  
105  Form CO, paragraphs 456 –466.  
106  In Annex 14 to the Form CO, the Parties provided two estimates, one based on previous sales and one 
based on data provided by IDG Consulting.  According to such estimates, Microsoft’s loss from not 
distributing ZeniMax games for rival consoles would range f rom [forecast million]  over the period 2021 – 
2028, corresponding to a percentage of ZeniMax sales on PlayStation and Nintendo Switch [forecast 
percentage] .   
107  Form CO, paragraph  463 and Annex 14. The Parties have calculated such switching rate by compar ing the 
projected losses from lost sales of ZeniMax games for Sony and Nintendo’s consoles with the projected 
gains from new players buying an Xbox to keep playing ZeniMax games.  
 
 
22 valuable .108 However,  rival consoles are significantly differentiated , and have 
accumulated brand loyalty .  
(110)  Secondly, a high switching rate by players is implausible due to the considerable 
switch ing costs between consoles, and the relative value of ZeniMax games 
compared to the gaming landscape.109 
(111)  Thirdly, the Notifying Party consider s that the players’ switching rates  indicated 
above are conservative, as they  would have to increase further if more realistic 
switching patterns were taken into account . In particular, the Notifying Party  submit s 
that multi -homing across console s may  further  reduce the incentives for a 
foreclosure strategy.110 Players loyal to Nintendo or Sony  consoles with a strong 
desire to play ZeniMax games can respond to a console exclusivity strategy by 
buying an Xbox to play ZeniMax games, while keeping  most  of their gaming 
activity and expenditure on their preferred console.111 
(112)  In this regard, the Notifying Party  submit s that cross -platform console ownership 
reduces the value of an incremental switcher, because player s who buy an Xbox as a 
second console would not bring their entire game purchasing activity to the Xbox. 
[details about the profit, value and ownership of the Xbox and the profit made from 
the sale of ZeniMax games] .112 113 
(113)  [Microsoft’s strategy regarding ZeniMax games] .114  
(114)  Therefore, according to the Notifying Party , Microsoft would not have the incentive 
to cease or limit making ZeniMax games available for purchase on rival consoles.  
(B) The Commission’s assessment  
(115)   The combined entity ’s incentive to foreclose  rival console game distributors 
depends on the balance between: (i) the losses from not distributing ZeniMax games 
broadly on other consoles; and (ii) the higher profits obtained from the increased 
sales of Xbox console s (and the related games and service s) to new end-users 
interested in playing ZeniMax games. In light of this  trade -off, the Commission 
concludes that the combined entity  would not have the incentive to engage in an 
input foreclosure strategy  by refusing to make ZeniMax games available on ri val 
consoles or degrading the terms under which these games are made available .  
                                                 
108  Weeds, Helen: “TV wars: Exclusive content and platform competition in pay TV”, The Economic Journal 
126.594 (2016).    
109  Form CO, paragraph  463.  
110    Form CO, paragraph  464 and Parties’ r eply to the RFI 2 of 14.1.2021, question 9.  
111  Data provided by Microsoft shows that in the US in 2019, [30-40]% of PlayStation 4 owners and [40-
50]% of    Nintendo Switch owners also owned an Xbox One.  
112  Parties’ reply to the RFI 2 of 14.1.2021, question 9. In Annex 14 to the Form CO of 29.1.2021, the Parties 
have provided data showing that the average Consumer Lifetime Value (i.e., the average gross margin that 
each additional Xbox user is worth to Microsoft over a console’s life cycle) amounts to  [USD 50 -100]. 
The value of an additional consumer is the highest when the latter purchases an Xbox console [details 
about  consumer value] . Consequently, the value of an additional Xbox consumer [details about  consumer 
value] .  
113  Form CO, paragraph  464 and Parties’ reply to the RFI 2 of  14.1.2021, question 9.  
114  Form CO, paragraph 465 . 
 
 
23 (116)  The Commission notes that an input foreclos ure strategy would only be 
economically viable  if ZeniMax games were able to attract a sufficiently high 
number of new players to the Xbox console ecosystem , and if Microsoft could  profit 
enough from their game purchasing activity .115 However, such an outcome is 
unlikely .  
(117)  First, both the Notifying Party and the market investigation indicate that players may 
consider switching  to anoth er console especially at the launch of a new console 
generation, an event that occurs approximately every eight years (the current console 
generation was launched in 2020 and is projected to be discontinued in 2028).116 
This is because, i n addition to the pu rchase of a console, players’ subsequent 
purchasing activities will concern games and related services that are not portable to 
another console  and are  exclusively available within that console ecosystem. 
Therefore, due to these  combined  costs, players are  likely to retain a console 
throughout its entire life cycle.  
(118)  In this regard , while a number of the  respondents  to the market investigation 
considered  that players would switch to another console to en joy exclusive 
content ,117 such a scenario  does not  appear probable in the case at hand. While  
exclusive games are relevant for stimulating demand, high switching rates are 
unlikely  and depend on several additional factors. First, distributors specified that  
players’ choices are influenced by consoles’ design, services,  functionalities  and the 
console brand used by peers.  Second, such switching would only occur if particular 
circumstances are met . For instance, a  publisher specified that content must be  
“extremely high quality […], otherwise players will te nd to stick to the console they 
are used to ”. Third , respondents explained that there exists large amounts of 
significantly  differentiated  content competing across platforms . 
(119)  Second , the Commis sion considers, in line with the Notifying Party’s  explanation,  
that rival console users could also purchase an Xbox as a second console, in addition 
to the one they already own , in order to play ZeniMax  games . As regards console 
multi -homing, according  to an NPD Group  survey ,118 30.6% of PlayStation 4 
console owners also own a Microsoft Xbox 1 and 28.6% also own a Nintendo 
Switch.  In this regard, several  respondents  to the market investigation  confirm ed that 
between 20% and 40% of console owners use more than one console brand .119 As a 
result , any purchase activity for the Xbox console focused solely on ZeniMax games , 
as explained in paragraph (112)  above,  would  not likely  offset the losses in curred 
from the sale of the console to the new player .120 
                                                 
115  See paragraph (108)  above. The Parties provided the relevant calculations in Annex 14 to the Form CO.  
116  Form CO, Figure 4. The life cycle of the last console generation lasted 8 years, whereas older console 
generations had a longer duration, exceeding ten years. As regards the current generation, Microsoft and 
Sony expect to discontinue the sale of the respective consoles duri ng the course of 2028, as indicated in 
Annex 14 to the Form CO, footnote 15.  
116  Form CO , Annex 3.   
117  Q1 – Questionnaire to market participants in the video gam ing industry , replies to question 25.  
118  Form CO, paragraph 500, data from NPD Group Presentati on, Annual Video Game Presentation, 3 March 
2020.  
119  Q1 – Questionnaire to market participants in the video gaming industry , replies to question  26.  
120  Form CO, paragraph  464 and Parties’ reply to the RFI 2 of 14 .1.2021, question 9.  
 
 
24 (120)  Third, m ore generally, the Commission  also notes that Sony and Nintendo consoles 
are differentiated products, due to the availability of several exclusive games, some 
of which, as detailed above ,121 are highly attractive to players. Rival consoles have 
built a strong reputation and enjoy a degree of brand loyalty by players , as 
demonstrated by a Best SEO Companies’ survey .122 Therefore,  on top of the 
considerations set out above , it is implausible that a sufficiently significant number 
of players would switch to the Xbox driven by the desire to play ZeniMax games, 
abandoning other ecosystem s with a richer game library.123  
(121)  In addition, respondents to the  market investigation confirm ed the absence of an 
incen tive for Microsoft t o engage in input foreclosure. The majority of respondents 
indicated that Microsoft would not have the  incentiv e to prevent rival console game 
distributors from selling ZeniMax games .124  
(122)  Furthermore, the Commission notes that the above  considerations are consistent  with 
the Notifying Party’s  declared strategy in relation to the Transaction.  [Microsoft’s 
future strategy regarding ZeniMax games] .125 126 127   
(123)  [Microsoft’s future strategy regarding ZeniMax games] .128 
(124)  Therefore, for the reasons set out above, the Commission concludes that the 
combined entity would not have the incentive to foreclose rival console video game 
distributors by engaging in a total or partial input foreclosure strategy.  
(C) Impact on effective competition  
(125)  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 . 
(126)  This conclusion is consistent  with the results of the market investigation. The 
majority of distributors considered  that the Transaction, in general, would have a 
neutral impact on the ir company, and no respondent believe d that the impact would 
be negative.129 The majority of distributors also indicated, more specifically, that the 
impact of a possible exclusivity strategy with regard to ZeniMax games would be 
neutral on the distribution market.130 
                                                 
121  See paragraphs  (104)  and (105)  above.  
122  Form CO, paragraph 499, Figure 11. The Best SEO Co mpanies’ survey Generational Brand Loyalty,  
13.11.2019, shows that approximately 40% of players are loyal users of Sony’s consoles, while 
approximately 31% of players are loyal to Microsoft’s consoles and 30% to Nintendo’s consoles.  
123  gamespot.com, PlaySt ation 4 command over exclusives leads to promising start for PlayStation 5, 
10.12.2020 (link availabl e here). See also p aragraph  (80) above .  
124  Q1 – Questionnaire to market participants in the video gaming industry , replies to question  34.  
125  Form CO, paragraphs 7 – 17.  
126  Form CO , paragraphs 7 –17 and 446.  
127  Parties’ re ply to the RFI 1 of 6.11.2020, question 1.   
128  Form CO , Annex 3.   
129  Q1 – Questionnaire to market participants in the video gaming industry , replies to question  37.     
130  Q1 – Questionnaire to market participants in the video gaming industry , replies to question  35.  
 
 
25 (127)  In light of the above, the Commission finds that a potential (partial or total) input 
foreclosure strategy would not have a material effect  on competition in the EEA.  
5.2.3.3.  Conclusion  
(128)  In light of the above, the Commission concludes that the Transaction does not raise 
serious doubts as to the compatibility with the internal market with respect to 
possible input foreclosure practices under all the alternative product markets for 
game publ ishing, whether at EEA or at worldwide  level.  
6. CONCLUSION  
(129)  For the above reasons, the European Commission has decided not to oppose the 
notified concentration  and to declare it compatible with the internal  market and with 
the functioning of the EEA Agreement. This decision is adopted in application of 
Article 6(1)(b) of the Merger Regulation and Article 57 of the EEA Agreement .  
For the Commission  
 
 
(Signed)  
Margrethe VESTAGER  
Executive Vice-President