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Microsoft is revising its proposed deal with Activision Blizzard in order to address concerns raised by UK regulators. The main alteration involves transferring cloud gaming rights for both existing and future Activision Blizzard games to Ubisoft. This change is aimed at satisfying the UK Competition and Markets Authority's worries about the potential impact of Microsoft's $68.7 billion acquisition on cloud gaming competition. As a result of this reshaped agreement, a new regulatory investigation has been initiated in the UK, expected to persist until October 18th.
Microsoft President Brad Smith explains, "To address concerns about the impact of the proposed acquisition on cloud game streaming, as highlighted by the UK Competition and Markets Authority, we are restructuring the transaction to acquire a more limited set of rights." He adds that this involves a post-merger agreement that transfers cloud streaming rights for all current and upcoming Activision Blizzard PC and console games for the next 15 years to Ubisoft Entertainment SA, a prominent global game publisher, with the rights being perpetual.
The revised deal means that if Microsoft finalizes the acquisition, it won't be able to exclusively offer Activision Blizzard games on Xbox Cloud Gaming. Additionally, Microsoft won't possess exclusive control over the licensing terms of these games on competing services. Instead, Ubisoft will have control over streaming rights for Activision Blizzard games outside the EU, and then license the titles back to Microsoft for inclusion in Xbox Cloud Gaming.
Smith elaborates, "Ubisoft will compensate Microsoft for the cloud streaming rights to Activision Blizzard’s games through a one-off payment and through a market-based wholesale pricing mechanism, including an option that supports pricing based on usage." He adds that Ubisoft will also be able to offer these games to cloud gaming services operating on non-Windows systems.
Furthermore, Ubisoft intends to integrate Activision Blizzard games into its Ubisoft Plus Multi Access subscription, which is accessible on PC, Xbox, Amazon Luna, and PlayStation via Ubisoft Plus Classics.
The UK's Competition and Markets Authority initially blocked Microsoft's deal in April due to cloud gaming concerns. Following the Federal Trade Commission's loss in a US federal court, negotiations were entered into with Microsoft. However, the restructured deal prompted a new investigation phase by the CMA, with a deadline set for October 18th.
The CMA has placed a final order on Microsoft's initial deal, globally prohibiting it during the investigation into this new restructuring of the proposed acquisition. Ubisoft will also have the option, for a fee, to demand Microsoft to adapt Activision's titles to operating systems other than Windows if Ubisoft decides to license the cloud streaming rights to non-Windows cloud gaming services.
This reshaped deal won't affect Microsoft's obligations to the European Commission. The EU regulators had approved the Activision Blizzard deal, taking into account a provision that allowed consumers in EU countries to stream current and future Activision Blizzard PC and console games through any cloud game streaming service of their choice.
The CMA will review the adjusted deal in the following weeks and make a decision by the October 18th deadline. Sarah Cardell, CEO of the CMA, emphasizes that this doesn't signify approval, stating, "This is not a green light. We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments. Our goal has not changed – any future decision on this new deal will ensure that the growing cloud gaming market continues to benefit from open and effective competition driving innovation and choice."
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