Microsoft has restructured its proposed $68.7 billion acquisition of Activision Blizzard to transfer cloud gaming rights for current and new Activision Blizzard games to Ubisoft. The move is designed to appease UK regulators who are concerned about the impact the deal would have on cloud gaming competition.
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Under the restructured deal, Ubisoft will control the streaming rights to Activision Blizzard games outside of the EU, and license titles back to Microsoft to be included in Xbox Cloud Gaming. Microsoft will not be able to release Activision Blizzard games exclusively on Xbox Cloud Gaming, nor will it be able to exclusively control the licensing terms of Activision Blizzard games on rival services.
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. Ubisoft will also be able 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 UK’s Competition and Markets Authority (CMA) first blocked Microsoft’s deal in April citing cloud gaming concerns, before agreeing to negotiations with the Xbox maker following the Federal Trade Commission’s (FTC) loss in a US federal court last month. Now the CMA has signaled a new investigation phase thanks to Microsoft’s restructured deal, with a statutory deadline set for October 18th.
The CMA will now assess the reworked deal over the coming weeks and deliver a decision by the October 18th deadline. “This is not a green light,” says Sarah Cardell, chief executive of the CMA. “We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments.”
The CMA’s decision is important because it could set a precedent for other cloud gaming deals. If the CMA approves the restructured deal, it could make it easier for other companies to acquire game publishers without running afoul of antitrust regulators. However, if the CMA blocks the deal, it could make it more difficult for companies to enter the cloud gaming market.
The restructured deal is a compromise between Microsoft and the CMA. It allows Microsoft to acquire Activision Blizzard without giving it too much control over the cloud gaming market. It also allows Ubisoft to expand its cloud gaming business. The deal will be closely watched by other companies in the gaming and cloud computing industries.
