Microsoft is taking significant steps to address concerns raised by regulators in the UK regarding its proposed acquisition of gaming giant Activision Blizzard. In a strategic move, Microsoft is restructuring the deal to transfer the cloud gaming rights for both current and future Activision Blizzard games to Ubisoft, a globally renowned game publisher. The motivation behind this decision is to allay the fears of UK regulators who have expressed reservations about the potential negative impact of Microsoft’s ambitious $68.7 billion deal on the competitive landscape of cloud gaming. This restructured deal has triggered a fresh regulatory investigation in the UK, the outcome of which is expected by October 18th.
Brad Smith, President of Microsoft, acknowledged the reasoning behind this change. Smith emphasized that the restructuring aims to directly address concerns voiced by the UK Competition and Markets Authority regarding the potential implications of the proposed acquisition on cloud game streaming. As part of this adjusted agreement, Microsoft will transfer the cloud streaming rights for all existing and upcoming Activision Blizzard PC and console games scheduled to be launched within the next 15 years to Ubisoft Entertainment SA, a prominent player in the global gaming industry. Importantly, these rights will remain in effect indefinitely.
Under this new arrangement, should Microsoft proceed with the acquisition, it will not have the exclusivity to launch Activision Blizzard games solely on its Xbox Cloud Gaming platform. Furthermore, Microsoft’s monopoly over the licensing terms of Activision Blizzard games on competing platforms will be curtailed. Instead, Ubisoft will gain control over the cloud gaming streaming rights for Activision Blizzard games outside of the European Union. Ubisoft will then license these titles back to Microsoft for inclusion in Xbox Cloud Gaming.
The compensation mechanism for this arrangement involves Ubisoft providing Microsoft with a one-time payment. Additionally, a market-based wholesale pricing structure will be implemented, with an option to incorporate pricing based on usage. Smith clarified that Ubisoft will also have the prerogative to offer Activision Blizzard’s games to cloud gaming services that operate on non-Windows operating systems, broadening the scope of accessibility.
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To bolster its offerings, Ubisoft is planning to integrate Activision Blizzard games into its existing Ubisoft Plus Multi Access subscription. This subscription service is accessible across multiple platforms, including PC, Xbox, Amazon Luna, and PlayStation through Ubisoft Plus Classics.
How does this affect Microsoft’s potential acquisition of Activision Blizzard?
The Competition and Markets Authority (CMA) in the UK initially thwarted Microsoft’s deal on grounds of cloud gaming concerns. Subsequently, following the Federal Trade Commission’s recent setback in a US federal court, the CMA engaged in negotiations with Microsoft. However, the revised deal structure prompted the CMA to initiate a fresh investigation phase, with a statutory deadline aligned with Microsoft’s extended deal closing date with Activision.
The CMA has now taken a definitive stance, issuing a final order that effectively blocks Microsoft’s original deal on a global scale. This unprecedented measure has been enacted to facilitate the investigation into the implications of the newly structured acquisition. The CMA also highlighted that Ubisoft will have the authority, for a fee, to require Microsoft to adapt Activision’s game titles for operating systems other than Windows. This could extend to systems like Linux if Ubisoft decides to utilize or license the cloud streaming rights to Activision’s games to a cloud gaming service running a non-Windows operating system.
Importantly, the adjusted transaction will not impact Microsoft’s commitments to the European Commission. The company has secured various cloud gaming agreements, and the EU regulators approved the Activision Blizzard deal in light of Microsoft’s offer of a free license to consumers in EU nations. This license empowers them to stream all current and future Activision Blizzard PC and console games via any cloud gaming service of their preference.
In conclusion, the CMA will diligently evaluate the reworked deal over the upcoming weeks and issue a final verdict by the October 18th deadline. Sarah Cardell, Chief Executive of the CMA, underscored the agency’s unwavering commitment to fostering an environment of open and effective competition that drives innovation and choice within the burgeoning cloud gaming market. This assessment process will be comprehensive, impartial, and aimed at safeguarding the interests of both players and consumers in the gaming landscape.
What do you make of Microsoft selling Activision’s cloud gaming rights to Ubisoft? Do you think that this will be the thing to allow the deal to go through in the UK? Does the upcoming war of acquisitions worry you as a gaming fan? Let us know in the comments section below!
Source: The Verge
