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Microsoft Proposes New Deal With Ubisoft Handling Activision Blizzard Streaming Rights In UK To CMA

by Wesley LeBlanc on Aug 22, 2023 at 07:39 AM

Microsoft has submitted a new deal to the U.K.’s Competition and Markets Authority regulatory agency that proposes Ubisoft get the rights to Activision Blizzard game streaming for 15 years. 

After the CMA blocked Microsoft’s proposed acquisition of Activision Blizzard for a colossal $69 billion back in April over cloud gaming concerns, Microsoft set its sights on the U.S. Federal Trade Commission for approval. In July, a California judge denied the FTC’s request for a preliminary injunction in its case to block Microsoft’s proposed acquisition. Shortly after that decision, Microsoft announced it was pausing its appeal efforts in the U.K. to negotiate with the CMA, and the CMA extended the company’s deadline to do so to August 29, 2023. 

Today, the CMA confirmed it is blocking Microsoft’s original proposed deal. However, Microsoft also offered a new deal today following that block that would transfer streaming rights of Activision Blizzard games on PC and console to Assassin’s Creed maker Ubisoft for 15 years in perpetuity. 

“As a result of the agreement with Ubisoft, Microsoft believes its proposed acquisition of Activision Blizzard presents a substantially different transaction under U.K. law than the transaction Microsoft submitted for the CMA’s consideration in 2022,” a Microsoft blog post reads. “As such, Microsoft today has notified the restructured transaction to the CMA and anticipates that the CMA review processes can be completed before the 90-day extension in its acquisition agreement with Activision Blizzard expires on October 18.”

Microsoft says under this restructured transaction, it will not be able to release Activision Blizzard games exclusively on its own cloud streaming service – Xbox Cloud Gaming – or to exclusively control the licensing terms of Activision Blizzard games for rival services. It says this deal will “enable Ubisoft to innovate and encourage different business models in the licensing and pricing of these games on cloud streaming services worldwide” and that 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.” 

This deal also allows Ubisoft to offer Activision Blizzard’s games on cloud gaming services on non-Windows machines. 

The CMA has confirmed this new deal was proposed to it, but notes it has yet to give it the green light. 

“We will now consider this deal under a new Phase 1 investigation,” CMA chief executive Sarah Cardell writes in a press release, explaining that because of Microsoft’s new proposal, the CMA will restart all proposal consideration for this as if it was a completely new offer. “This is not a green light. We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments. 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.” 

Microsoft vice chair and president Brad Smith tweeted today, “[We] submitted a restructured proposal to the CMA for approval of our Activision Blizzard acquisition under UK law,” and that “this new proposal also honors our prior commercial and regulatory commitments.” 

Microsoft says since its initial announcement in January of last year, it has “endeavored to earn regulatory approval for the transaction, addressing concerns when raised,” including entering legally binding contracts to bring Call of Duty to Nintendo and PlayStation platforms and Activision Blizzard games to rival cloud streaming platforms. It notes that, as a result, the proposal has been given the green light in more than 40 countries. 

“We believe this development is positive for players, the progression of the cloud game streaming market, and for the growth of our industry,” Microsoft’s blog post reads. “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.” 

Activision Blizzard CEO Bobby Kotick shared the following with the company today

I want to share an update on our merger with Microsoft.
To address the UK CMA’s concerns regarding cloud streaming, Microsoft announced it filed a new merger application in the UK that includes a divestiture for cloud streaming rights at closing with respect to current and new PC and console games. We welcome Microsoft's decision to enter into this agreement and submit a new application to the CMA, which Microsoft believes will address the CMA’s concerns. 
For us, nothing substantially changes with the addition of this divestiture: our merger agreement with Microsoft, closing deadline, and the cash consideration to be paid for each Activision Blizzard share at closing remain the same. We will continue to work closely with Microsoft and the CMA throughout the remaining review process, and we are committed to help Microsoft clear any final hurdles as quickly as possible. 
On that note, our integration management team is hard at work to ensure we are prepared for a smooth close. It’s a major, cross-functional, collaborative effort, and I am thankful for all the work that’s being done. 
This has been a longer journey than expected, and I am very proud of how focused everyone has remained on delivering great games. Thanks for your continued dedication and commitment to our players. 
More to come."

Ubisoft senior vice president of strategic partnerships and business development, Chris Early, says the company is dedicated to delivering amazing experiences to players wherever they choose to play. "Over the past 15 years, we've built and honed our online services and distribution ecosystem into one of the most complete in the industry," he writes in a press release. "Today's deal will give players even more opportunities to access and enjoy some of the biggest brands in gaming."

To catch up on everything that’s happened so far, first read about Microsoft revealing it was acquiring Activision Blizzard for a colossal $69 billion and then check out this story about how the CMA blocked this acquisition in the U.K. over cloud gaming concerns. After that, read about how the FTC’s preliminary injunction request was denied by a California judge this summer and then read about Microsoft’s new plans to negotiate something satisfactory with the CMA.

How do you feel about Ubisoft handling the streaming of Activision Blizzard games in the U.K.? Let us know in the comments below!

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