After a year and a half-long assessment of the deal, the TCA finally published its reasoned decision dated 13 July 2023 and 23-31/592-202 regarding Microsoft's acquisition of Activision Blizzard, a leader in the fast-paced gaming industry, known for developing extremely notable games such as Call of Duty, Candy Crush, and World of Warcraft. The transaction, valued at USD 68.7 billion, raised many questions worldwide, as Microsoft would become the world's third-largest gaming company posttransaction by revenue, trailing behind its biggest competitors, namely Tencent and Sony. Accordingly, multiple leading competition authorities worldwide, such as the European Commission ("Commission"), the Competition and Markets Authority, and the Federal Trade Commission, publicly expressed their competitive concerns regarding the deal alongside the TCA.
The TCA's review was not without challenges. Although the parties were not required to submit separate commitments to the TCA, the assessment of the deal took a year and a half, and the TCA evaluated in its reasoned decision that commitments submitted to the Commission also applied in Türkiye. The reasoned decision provides further useful insight into how the TCA approached the dynamic, fastpaced gaming sector that involves giant players, as summarized below:
Regarding the definition of the relevant product market, the TCA referred to paragraph 20 of the Guidelines on the Definition of the Relevant Market, which states that a market definition may be omitted if the transaction subject to review does not raise competition concerns within the framework of possible alternative market definitions. Accordingly, the TCA stated that there was no need to make a precise relevant product market definition for game development and publishing services within the scope of the case file, as it would not change the assessment to be made. However, in its assessments on the game development and publishing sector, "computer and console games" and "mobile games" were considered as two separate markets. While determining the relevant product market for the game distribution market, it was evaluated that the digital game distribution market should be taken as the basis in the evaluation for the transaction, considering that the parties do not have activities in the physical distribution channel. However, digital game distribution can be divided into subrelevant product markets as "game distribution for computers," "game distribution for consoles," and "game distribution for mobile devices" according to game playing devices. Additionally, the assessments for game playing tools were carried out by taking into account the hypothetical console gaming and cloud gaming markets in which the transaction parties operate and in which the transaction was expected to have an impact. Lastly, the TCA stated that a binary division of the online advertising market into searchbased and display advertising is generally adopted, and that a possible third relevant market could be defined as in-game advertising, but such an approach would create a very narrow product market scenario.
Regarding competitive concerns, the TCA evaluated each affected market in Türkiye as well as globally affected markets. In this regard, the Commission conducted an in-depth market investigation, confirming that Microsoft could harm competition in the distribution of games via cloud game streaming services and that its position in the market for PC operating systems would be strengthened. In response to the Commission's competition concerns regarding the distribution of PC and console games through cloud game streaming services, Microsoft proposed a set of extensive licensing commitments ("Commitments") lasting for ten years. These Commitments include: (i) granting consumers in the EEA a free license, enabling them to stream all existing and upcoming Activision Blizzard PC and console games through any cloud game streaming service they prefer, provided they possess a valid license for those games; and (ii) providing cloud game streaming service providers in the EEA with a corresponding free license, allowing them to offer streaming access to Activision Blizzard's PC and console games to gamers based in the region. The proposed commitments will make existing and future Activision Blizzard PC titles ("Eligible Games"), including Call of Duty, available to cloud gaming services on a global basis.
Overall, after a lengthy assessment, the TCA cleared the transaction on the basis that there was no overlap of the parties' activities in Türkiye within the scope of cloud gaming services and that there was a very limited possibility of overlap in terms of the parties' activities in this market on a global scale. The TCA stated that the commitments to the Commission completely eliminated the concerns regarding the closure of the market to competitors. In this context, the TCA concluded that the relevant transaction would not raise anticompetitive concerns within the scope of unilateral effects in the market.
The Microsoft decision represents a detailed analysis of the gaming industry in the Turkish competition law sphere and is expected to be a prominent reference for future merger decisions in the dynamic digital industry.
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