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Why Microsoft's claim that it has 20% market share in Europe vs PlayStation's 80% was accurate

There was a reason the company discounted Nintendo

During this week's hearing in Europe over the Activision Blizzard acquisition, Microsoft made a case that -- when it comes to video games -- it is very much the small player.

It showed a slide to highlight the market share of the console sector in Europe, revealing that PlayStation holds 80% of the market, whereas Xbox has just 20%.

In the press briefing, Microsoft's Brad Smith went further: "Globally, it’s about 70/30. In Japan, it’s 96 to 4. And while there are some fluctuations over time, these numbers have been remarkably steady for two decades. Even last year, when Sony suffered constraints in its supply chain and it saw its numbers dip, they came back strong in the fourth quarter as their supply chain recovered. By our calculation, on a global basis, Sony outsold Microsoft in the fourth quarter by a margin of 69 to 31, pretty much consistent with the global market shares we’ve seen for 20 years."

This provoked some criticism from certain corners. Not because the figures are inaccurate, but because they conveniently ignore Nintendo. Nintendo Switch is not only a console, but it has been the market leader for quite some time, including in Europe where it holds a strong install base. By only focusing on the PlayStation and Xbox, Microsoft has made Sony look even more dominant than it really is.

But this criticism isn't fair. Microsoft has actually been strongly arguing that Nintendo is a viable competitor, because it undermines one of the key arguments around this whole regulatory battle: that Call of Duty is a title so important that a console couldn't succeed without it. Nintendo Switch is the most popular console in the world right now and does not have Call of Duty on it. It's what convinced the Brazil regulator to approve the deal.

The counter argument has been that Nintendo operates in a sufficiently different market, targeting families, children and more casual gamers. It's an argument that has been accepted by the regulators, and the FTC defines the console market -- in this case -- as just Xbox and PlayStation.

So Microsoft has simply accepted this position and presented the market as the regulators see it.