Microsoft is changing its plans for the deal with Activision Blizzard. They are now giving the rights to allow Ubisoft to offer cloud gaming for both current and future Activision Blizzard games. This change is being done to make regulators in the UK happy. These regulators were worried that Microsoft’s big $68.7 billion deal would make it hard for other cloud gaming companies to compete. Because of this change, a new investigation in the UK might go on until October 18th.
Microsoft president Brad Smith mentioned, “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.” He added, “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.”
This revised agreement implies that if Microsoft finalises its proposed acquisition, it will not retain the exclusive capability to launch Activision Blizzard games solely on Xbox Cloud Gaming. Furthermore, Microsoft won’t have the sole authority to dictate the licensing conditions for Activision Blizzard games on competing platforms. Instead, the control over streaming rights for Activision Blizzard games outside the EU will shift to Ubisoft. Ubisoft will then license these titles to Microsoft for inclusion in Xbox Cloud Gaming.
Ubisoft’s Inclusion of Activision Blizzard Games in Subscription and Regulatory Challenges
Ubisoft has decided to include Activision Blizzard games in its Ubisoft Plus Multi Access subscription, expanding its availability across various platforms, including PC, Xbox, Amazon Luna, and PlayStation through Ubisoft Plus Classics.
According to Smith, “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 also elaborated that this arrangement will enable Ubisoft to offer Activision Blizzard’s games to cloud gaming services that operate on non-Windows operating systems.
In the UK, the Competition and Markets Authority (CMA) initially rejected Microsoft’s agreement in April, citing concerns related to cloud gaming. However, the CMA later negotiated with Microsoft after the Federal Trade Commission (FTC) faced a setback in a US federal court case. The CMA has entered a new investigation phase due to Microsoft’s revised deal, setting a statutory deadline of October 18th. This aligns with the extended closing date for the deal with Activision that Microsoft recently agreed upon. A source familiar with Microsoft’s intentions shared that the company anticipates finalizing the Activision Blizzard acquisition in early October.
CMA to Review Altered Microsoft-Activision Deal Amidst Global Restrictions
The CMA has issued a final order regarding Microsoft’s original deal, imposing a worldwide restriction while scrutinizing the restructured proposal for acquiring Activision Blizzard. Notably, the CMA emphasizes that Ubisoft also holds the option, for a fee, to request Microsoft to make adjustments to Activision’s games for operating systems other than Windows, such as Linux. This provision will apply if Ubisoft decides to utilize or license the cloud streaming rights of Activision’s titles to a cloud gaming service operating on a non-Windows system.
Despite the altered transaction, Microsoft’s commitments to the European Commission remain unchanged. The company has inked multiple cloud gaming agreements, and regulatory approval from EU authorities was granted for the Activision Blizzard acquisition. This approval includes a provision allowing consumers in EU countries to access and stream all existing and future Activision Blizzard PC and console games they are licensed for via “any cloud game streaming services of their choice.”
The CMA is set to review the modified agreement in the upcoming weeks and will provide a verdict before the deadline of October 18th. Sarah Cardell, the CEO of the CMA, emphasized that this isn’t an automatic approval. She mentioned that they will meticulously and impartially evaluate the specifics of the revised arrangement and its potential effects on competition.
This assessment will also take into account input from external parties. Cardell reaffirmed that their objective remains unchanged – any forthcoming determination regarding this fresh agreement will guarantee that the burgeoning cloud gaming sector continues to thrive through healthy competition, which drives innovation and consumer choice.