The UK CMA is Microsoft’s last hurdle before it can finalize its acquisition of Activision Blizzard. The tech company looks like it is considering the CMA’s advice to divest part of Activision Blizzard as it seeks approval from the regulatory body.
The UK CMA is the only regulatory body in the world that stood up to Microsoft’s planned merger with Activision Blizzard. A total of 41 other countries and territories including the European Union have approved of the merger. Microsoft also won in court against the US FTC, which also sought to block the deal.
Microsoft is now restructuring its proposed buyout of Activision Blizzard, announcing that it is transferring the cloud streaming rights to all Activision Blizzard games over the next 15 years to Ubisoft. The tech company hopes to address the concerns raised by the UK CMA in its disapproval of the $69 billion deal.
“To address the concerns about the impact of the proposed acquisition on cloud game streaming raised by the UK Competition and Markets Authority, we are restructuring the transaction to acquire a narrower set of rights,” Microsoft President Brad Smith stated in a blog post on August 22.
This includes executing an agreement effective at the closing of our merger that transfers the cloud streaming rights for all current and new Activision Blizzard PC and console games released over the next 15 years to Ubisoft Entertainment SA, a leading global game publisher. The rights will be in perpetuity.”
The next step in the UK for Activision Blizzard’s deal with Microsoft:
Our CEO just sent this email to all employees… pic.twitter.com/kqtD07bMwK
— Lulu Cheng Meservey (@lulumeservey) August 22, 2023
Ubisoft confirmed that Activision Blizzard games are coming to its Ubisoft+ subscription service and bring the titles to platforms like PlayStation via Ubisoft Plus Classic. The French gaming company can also offer these games to non-Windows PCs. Ubisoft will pay Microsoft a one-time fee and via a “market-based wholesale pricing mechanism.”
“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,” Smith explained.
Microsoft and the CMA agreed to negotiate after the tech giant won against the Federal Trade Commission in a US federal court last month. The UK anti-trust regulator will now initiate a new investigation as Microsoft restructured its deal with Activision Blizzard. The Xbox maker expects the review process to be completed before the October 18th deadline to finalize the merger.
The CMA has imposed a final order on the original deal between Microsoft and Activision Blizzard, prohibiting it worldwide while it reviews the restructuring of the proposed merger. In a press release, the CMA states, “Ubisoft will also be able, for a fee, to require Microsoft to adapt Activision’s titles to operating systems other than Windows, such as Linux, if it decides to use or license out the cloud streaming rights to Activision’s titles to a cloud gaming service that runs a non-Windows operating system.”
The Ubisoft+ lineup is expanding!
We're excited to announce a new agreement that will bring Activision Blizzard games to Ubisoft+ via streaming upon the completion of Microsoft’s acquisition of Activision Blizzard!
We’ll also be licensing the games to a range of cloud streaming… pic.twitter.com/sZTnEFJedC
— Ubisoft (@Ubisoft) August 22, 2023
Microsoft will still have to honor its commitments to the European Commission and contractual obligations to cloud gaming providers. The company made several deals with cloud gaming providers while the proposed acquisition was being investigated.
The agreement with Ubisoft has been structured so that Microsoft will still acquire the rights needed to honor fully its legal obligations under its commitments to the European Commission, as well as its existing contractual obligations to other cloud game streaming providers, including Nvidia, Boosteroid, Ubitus, and Nware,” Smith said.
The CMA has stated that it will review the restructured deal and give its decision by October 18, in order to honor the deal’s deadline in case they ultimately decide to approve it. However, the UK regulator clarified that it is not giving the green light just yet.
“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,” says Sarah Cardell, chief executive of the CMA.
“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.”
Microsoft and Activision Blizzard agreed to extend the deadline to finalize the deal to October 18. The tech giant will have to pay a massive fee if the acquisition does not fall through.
