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Microsoft has offered to sell the cloud streaming rights of Activision games to competing company Ubisoft, in a bid to comply with UK regulators.
The UK’s competition watchdog has opened a new investigation into Microsoft’s planned acquisition of Activision Blizzard, which has been altered to comply with competition concerns.
The UK Competition and Markets Authority (CMA) previously blocked Microsoft’s acquisition bid, on the grounds that it would stifle innovation and choice in cloud gaming.
But Microsoft and Activision have submitted an amended deal, which states that Microsoft will not acquire the cloud rights for existing Activision PC and console games. This will also apply for new games released by Activision over the next 15 years.
Microsoft president and vice chair Brad Smith said this deal means the company won’t release Activision Blizzard games exclusively on its own cloud streaming service or exclusively control the licensing terms of Activision Blizzard games for rival services.
Under the new deal, these rights will instead be sold to the gaming publisher Ubisoft before Microsoft’s acquisition of Activision. Microsoft said this restructured deal aims to address the CMA’s competition concerns.
“The agreement provides Ubisoft with a unique opportunity to commercialise the distribution of games via cloud streaming,” Smith said. “The agreement will enable Ubisoft to innovate and encourage different business models in the licensing and pricing of these games on cloud streaming services worldwide.”
Ubisoft will compensate Microsoft for these cloud gaming rights through a one-off payment and through a “market-based wholesale pricing mechanism”.
The CMA has begun a phase one investigation into this restructured deal. CMA CEO Sarah Cardell said the watchdog will “carefully and objectively assess the details of the restructured deal and its impact on competition”.
“This is not a green light,” Cardell said. “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.”
The CMA is inviting comments from any interested party on the impact that the newly structured deal could have on competition in the UK. The watchdog has until 18 October 2023 to decide if it will launch a more in-depth investigation into the new deal.
The last hurdle
Microsoft first announced plans to acquire the gaming company behind Call of Duty and Candy Crush in January last year. It was estimated at the time that the acquisition would make Microsoft the world’s third-largest video game company by revenue after Tencent and Sony.
Soon after the announcement, the two companies were hit by a barrage of regulatory scrutiny on both sides of the Atlantic.
However, most other challenges to the deal have been overcome, making the CMA the last major obstacle for Microsoft and Activision. Last month, a US judge ruled against an attempted block by the Federal Trade Commission. In May, the EU gave Microsoft and Activision its approval to go ahead with the deal following an in-depth review.
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