In a bid to address concerns raised by UK regulators over its proposed $68.7 billion acquisition of Activision Blizzard, Microsoft has embarked on restructuring that will see the transfer of cloud gaming rights for current and future Activision Blizzard titles to Ubisoft.
The move aims to allay competition fears regarding cloud gaming in the UK and demonstrates Microsoft’s willingness to collaborate with industry peers to address regulatory concerns.
The revised arrangement signifies a significant departure from Microsoft’s initial intentions. If the deal proceeds, Microsoft will forfeit the ability to exclusively release Activision Blizzard games on its Xbox Cloud Gaming platform. Moreover, the company will no longer maintain exclusive control over the licensing terms for these games on rival cloud gaming services, reported The Verge.
The UK’s Competition and Markets Authority (CMA), which initially blocked the Microsoft-Activision Blizzard deal due to concerns about its impact on cloud gaming, has embarked on a new investigative phase triggered by this restructured agreement. This process is set to continue until October 18th, concurrent with the extended deadline Microsoft recently agreed upon for finalising the Activision Blizzard acquisition.
“We believe that this development is positive for players, the progression of the cloud game streaming market, and the growth of our industry. And as we continue to navigate the review process with the CMA, we remain as committed as ever to bringing the incredible benefits of the acquisition to players, developers, and the industry. Today’s development brings us one step closer to bringing the joy of gaming to players everywhere,” said Brad Smith, Vice Chair and President, Microsoft.
The CMA’s response includes a final order preventing Microsoft’s original deal from progressing globally. The regulator’s decision underscores the growing scrutiny over the consolidation of power in the cloud gaming sector. Microsoft’s agreement with Ubisoft also includes provisions for adapting Activision titles to non-Windows operating systems, such as Linux, to maintain healthy competition.
However, the restructuring doesn’t influence Microsoft’s obligations to the European Commission, as the company had previously secured approval through a unique strategy that allows consumers in EU countries to stream current and future Activision Blizzard games via their preferred cloud gaming services.
The CMA will meticulously evaluate the reworked deal in the forthcoming weeks, with a decision due by the October 18th deadline. Sarah Cardell, the Chief Executive of the CMA, reaffirmed the regulatory body’s commitment to preserving a competitive cloud gaming landscape, fostering innovation and choice.
“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.” reaffirmed Sarah Cardell.
In January 2022, Microsoft announced to acquire Activision Blizzard for $68.7 million at a $95 per share value. However, the regulators in the UK were concerned about this deal’s impact on cloud gaming, thus blocking the deal.