What you need to know
- Microsoft announced its plans to purchase Activision Blizzard, Inc. in January 2022 for a record-setting $68.7 billion.
- The merger has undergone scrutiny, including legal action, from various regulatory bodies around the globe.
- The UK's Competition and Markets Authority was the only regulatory agency to deny the merger outright, with more than 40 other countries approving the deal.
- Microsoft's Vice Chair and President Brad Smith have announced that the acquisition has been restructured to narrow the rights by transferring cloud streaming rights for all current and new Activision Blizzard PC and console games released over the next 15 years to Ubisoft Entertainment SA.
- The transfer of rights will remain in perpetuity.
- The current acquisition agreement between Activision Blizzard and Microsoft expires on October 18 after being extended when the clock ran out for regulatory approval in July.
Microsoft's efforts to appease the concerns of the UK's Competition and Markets Agency (CMA) as they seek approval for a record-setting $69 billion merger with Activision Blizzard continues. In their rejection of the acquisition, the CMA expressed concerns about the nascent cloud gaming market. In the latest unexpected twist relating to Microsoft's efforts to push the deal across the finish line Vice Chair and President Brad Smith has penned a blog detailing an arrangement for Microsoft to sell the rights for cloud streaming ABK titles to Ubisoft Entertainment SA.
The newly restructured agreement between Microsoft and Activision Blizzard will narrow the rights that Microsoft receives as part of the transaction, instead transferring cloud streaming rights for all current and new Activision Blizzard PC and console games that are released over the next 15 years to Ubisoft Entertainment SA. Microsoft will no longer be able to release ABK titles on Xbox Cloud Gaming exclusively, nor will Microsoft exclusively control the licensing terms for rival cloud streaming services.
Microsoft has previously entered into agreements with several cloud streaming providers, including NVIDIA, Boosteroid, Ubitus, and Nware, to provide ABK titles to those services upon the closure of the acquisition. During the Xbox vs. FTC trial, however, the FTC tried to paint a scenario where Microsoft effectively chose its competitors in the cloud gaming space by determining who could gain access to ABK's library of games, including the annual blockbuster Call of Duty. The FTC argued that Microsoft could effectively foreclose on an otherwise successful cloud streaming competitor by withholding ABK games from their service. However, this argument fell flat in court as the judge ruled in Microsoft's favor.
The European Union had similar concerns about cloud gaming foreclosures. Still, unlike the CMA, they were content with the marketing agreements between Microsoft and other cloud streaming platforms to provide access to the Activision Blizzard library. According to Brad Smith, the rights acquired by Ubisoft for cloud streaming should the CMA approve the newly reworked acquisition have been negotiated in such a way as to maintain the integrity of the original streaming deals, keeping Microsoft and Activision Blizzard in compliance with the remedies they presented to the EU.
The CMA in the UK has been intent on going all in on concerns related to cloud streaming, holding steadfast that the negotiated agreements with NVIDIA, Boosteroid, and the like were insufficient. The regulatory body has been the lone holdout preventing the acquisition from closing by its original July 18 deadline. Microsoft and Activision Blizzard were forced to renegotiate the deal and extend the deadline to October 18.
Due to the acquisition being restructured, the CMA will now need to reassess the deal and provide a response on whether or not the new remedy with Ubisoft will be sufficient for approval.
"Since our initial announcement with Activision Blizzard in January last year, we have endeavored to earn regulatory approval for the transaction, addressing concerns when raised, including by entering into binding legal commitments to bring Call of Duty to rival consoles and Activision Blizzard games to rival cloud streaming platforms. As a result, the transaction now is in a position to move forward in more than 40 countries," writes Brad Smith of the restructured agreement, "We believe that this development is positive for players, the progression of the cloud game streaming market, and for the growth of our industry."
This is a developing story and we will continue to update as more information becomes available.
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Cole is the resident Call of Duty know-it-all and indie game enthusiast for Windows Central. She's a lifelong artist with two decades of experience in digital painting, and she will happily talk your ear off about budget pen displays.
The change is a sort of shell game.Reply
UBIsoft "gets" the Activision PC and Console streaming rights for 15 years and licenses them back to MS and anybody else that wants to pay doesn't already have a deal with MS. (Note that UBISOFT is reportedly paying royalties to MS from those licenses.) At the end of the 15 years the rights for new games revert back to MS. (By then MS will have fully absorbed and reorganized Activision out of existence or even a sub-brand.)
So what changes?
1- Further delays on a deal that is still going to happen. One way or another. (Right now, I favor "another", aka, hardball.)
2- The CMA gets to pretend they matter. (For now. There will be repercussions.)
3- AMAZON LUNA gets to pay to stream activision games. Big win there, in a still tiny market where the only AAA games on luna were from UBISOFT. At a premium. Good tech, minimal content, high price.
4- Anybody who thinks they can make money streaming games can pay to stream Activision games. Many will and this will balkanize the market so that nobody but the big, deep pockets can afford to stay and survive until the niche matures. Lots of money lost trying to grow a market. (We've seen this before, right?) MS likely saves a good chunk of cash right there as others promote cloud gaming to their advantage.
It sounds like a big deal...on paper.
On the bottom line? Not much changes and not a single UK company will see a change. Game streaming if it ever takes off will be dominated by MS, AMAZON, NVIDIA (seen their valuation lately?), UBISOFT (for a while), and maybe APPLE. The "competition" the CMA wants can't afford the ante to stay long term. Not when MS and AMAZON own the global datacenter networks they run on.
THE CMA has no idea of what the gaming world is like, little idea of what the tech world is like, and even less concept of what their posturing is doing to the UK.