Did Microsoft break its promise to the EU about Bethesda exclusives? | For The Record

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Reports are spreading that the European Union has stepped in to defend Microsoft against the Federal Trade Commission's lawsuit to block the proposed acquisition of Activision Blizzard.

The crux of the argument is that the EU seemingly disagrees with the implication that Microsoft broke promises about not making Starfield and other Bethesda games exclusive while pushing for its acquisition of ZeniMax Media.

More details have since emerged around the EU's response, which offer some clarification around the issue of ZeniMax exclusives on Microsoft platforms in relation to its acquisition appeal.

What the FTC said

In its filing last week, the FTC said Microsoft already has a history of "acquiring and using valuable gaming content to suppress competition from rival consoles" – a key reason why it believes the company should not be allowed to acquire Activision Blizzard.

Here is the relevant part of the FTC's statement:

"Microsoft decided to make several of Bethesda's titles, including Starfield and Redfall, Microsoft exclusives despite assurances it had given to European antitrust authoritiries that it has no incentive to withhold games from rival consoles."

The above references Microsoft's later announcement that Starfield will be exclusive to Xbox and PC, and was given as an example of the reasons for which it was filing the lawsuit.

The EU response

Speaking to Axios' Stephen Totilo, a representative for the EU agency that handled the deal offered no comment on whether it agrees that Microsoft did not stay try to its assurances to the EU on ZeniMax.

A representative told Totilo:

"The Commission cleared the Microsoft/ZeniMax transaction unconditionally as it concluded that the transaction would not raise competition concerns."

They continued: "Microsoft did not offer any commitments to the Commission," and added that conclusion did not rely on anything Microsoft said about future ZeniMax releases.

Why the EU approved the ZeniMax deal

Totilo cited the original EU report on the approval for Microsoft's acquisition of ZeniMax as saying the platform holder "would not have the incentive to cease or limit making ZeniMax games available for purchase on rival consoles."

Further, the EU stated that ZeniMax's games are not significant or successful enough to move the needle when it comes to competition in the console space; if they became exclusive to a single platform, users on rival devices would still have plenty of alternatives.

Here is the EU's exact wording:

"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 vidoe game content to attract players."

What does this mean?

Putting it as simply as possible, Microsoft does not appear to have broken any promises.

According to the EU, the platform holder claimed it had no incentive to make ZeniMax games exclusives to its ecosystem. While this does not mean it would never do so, it was never formally obliged to keep releasing Bethesda titles on other rival platforms

The EU also said in its approval of the deal that, even if Microsoft did make such titles exclusive, it would not affect competition significantly enough to warrant blocking the ZeniMax acquisition.

It's worth noting that the EU has yet to say either way whether or not it believes Call of Duty going exclusive would affect competition. (However, UK regulator the Competition and Markets Authority has said it believes exclusivity will harm competition)

Also worth noting is that the FTC statement is also not inaccurate: Microsoft did give assurances to the EU that it had no incentive to make these games exclusive, and then it did announce they would be exclusive to Xbox and PC.

Microsoft's proposed acquisition of Activision Blizzard has already been approved by Brazil and Saudi Arabia.

The deal is currently facing in-depth investigations by both the EU and the CMA. You can find out more about the regulatory hurdles Microsoft and Activision face in our handy primer.

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