The Microsoft logo is seen on a smartphone placed over the Activision Blizzard games character displayed.
Dado Ruvic | Reuters
Microsoft on Tuesday presented a new agreement for the acquisition of ActivisionBlizzardoffering a series of concessions after UK regulators rejected his initial proposal.
The American technology giant first proposed acquisition of Activision for $69 billion in January 2022but has since faced regulatory challenges in the US, Europe and the UK
On Tuesday, the UK Competition and Markets Authority confirmed that it had blocked the original deal. However, he said Microsoft and Activision have agreed to a new, restructured deal, which the CMA will now investigate with an October 18 decision deadline.
The Redmond, Wash.-based tech giant expects the review can be completed before then, Microsoft President Brad Smith said. said in a statement Tuesday.
Under the restructured deal, Microsoft will not acquire cloud rights for existing Activision PC and console games, or for new games Activision publishes within the next 15 years, the CMA said. Instead, these rights will be assigned to the French game publisher Ubisoft Entertainment prior to Microsoft’s acquisition of Activision, the CMA added.
Ubisoft shares rose more than 9% in European trading. Activision shares rose 1%, while Microsoft was up less than 1% at the start of US trading.
The CMA has been the most vocal critic of the takeover, citing concerns that the deal could stifle competition in the nascent cloud gaming market.
Cloud gaming is seen as the industry’s next frontier, offering subscription services that allow people to stream games like they would movies or shows on netflix. It could even remove the need for expensive consoles, with users playing games on PCs, mobiles and TVs instead.
Regulators have previously argued that Microsoft could also take key Activision games, like Call of Duty, and make them exclusive to Xbox and other Microsoft platforms.
The authorities in the The European Union was the first major regulator to approve the deal back in May. To cross that line, Microsoft offered concessions, such as offering cloud gaming platforms royalty-free licenses to stream Activision games, if a consumer purchased them.
The CMA at the time refused similar measures which it said would allow Microsoft to “set the terms of this market for the next ten years”.
In the United States, the Federal Trade Commission has been fight a legal battle with Microsoft in an attempt to reverse the Activision takeover. In July, a judge blocked the FTC’s attempt to do sopaving the way for the conclusion of the agreement in the United States
A few hours later, the CMA said he was “prepared to consider any proposal from Microsoft to restructure the transaction” and allay the regulator’s concerns.
Microsoft’s new proposal in the UK
The restructured agreement and assignment of cloud rights to Ubisoft is intended to provide an independent third-party content provider the ability to provide Activision’s game content to all cloud game service providers, including Microsoft himself.
Ubisoft may license content from Activision under various business models, including subscription services.
The deal would also require Microsoft to provide versions of games on operating systems other than Windows, which it owns.
“Microsoft has notified a new, restructured agreement, which is materially different from what was on the table previously,” CMA CEO Sarah Cardell said in a statement.
“As part of this new agreement, Activision’s cloud streaming rights outside of the EEA (European Economic Area) will be sold to a rival, Ubisoft, who will be able to license Activision’s content to any which cloud game provider. This will allow gamers to access Activision games in a variety of ways, including through cloud-based multi-game subscription services.”
Cardell stressed that this was not a sign of an endorsement of the deal.
“This is not a green light. We will carefully and objectively assess the details of the restructured agreement and its impact on competition, including in light of third-party comments.”
For its part, Microsoft will be compensated for its divestiture to Ubisoft “through a one-time payment and through a market-based wholesale pricing mechanism, including an option that supports usage-based pricing. This will also give Ubisoft the ability to offer Activision games from Blizzard to cloud gaming services running operating systems other than Windows,” Smith said on Tuesday.
“We are committed to delivering incredible experiences for our players, wherever they choose to play,” Chris Early, senior vice president of strategic partnerships and business development at Ubisoft, said tuesday. “Today’s agreement will give gamers even more opportunities to access and enjoy some of the biggest gaming brands.”
