Microsoft to Sells Activision Cloud Gaming Right to Ubisoft in Order to Gain CMA Approval

Microsoft is reportedly looking to restructure its Activision Blizzard acquisition. Leveraging the cloud gaming rights for games from Activision Blizzard, Microsoft has its sights on selling current and future games from the publisher to Ubisoft in order to gain approval from the UK’s Competition and Markets Authority (CMA).

Microsoft’s final barrier to finalizing its proposed $68.7 billion USD (around $92.9 billion CAD) acquisition of Activision Blizzard is the CMA. The regulatory body has continuously brought up antitrust concerns, forcing Microsoft to now restructure the deal in order to appease CMA.

“To address the concerns about the impact of the proposed acquisition on cloud game streaming raised by the UK Competition and Markets Authority, we are restructuring the transaction to acquire a narrower set of rights,” Microsoft president Brad Smith says in a statement. “This includes executing an agreement effective at the closing of our merger that transfers the cloud streaming rights for all current and new Activision Blizzard PC and console games released over the next 15 years to Ubisoft Entertainment SA, a leading global game publisher. The rights will be in perpetuity.”

Essentially, if Microsoft’s acquisition does go through, the restructured deal ensures that current and future Activision Blizzard games won’t be exclusive to Xbox Cloud Gaming. Instead, Ubisoft will be in control of the streaming rights to Activision Blizzard titles outside of the EU. Ubisoft will also have exclusive control when it comes to licensing said titles to Microsoft in order to be included in Xbox Cloud Gaming.

“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,” Smith goes on to explain in the statement. “It will also give Ubisoft the opportunity to offer Activision Blizzard’s games to cloud gaming services running non-Windows operating systems.”

In addition, Ubisoft will also have the power to add Activision Blizzard titles to Ubisoft+ Multi Access. This subscription service is available on Xbox, PlayStation, PC, and Amazon Lina for $19.99/month.

A big focal point of the CMA and other regulatory bodies is how the Microsoft acquisition will affect the cloud gaming landscape. This ultimately led the CMA to block the Activision Blizzard deal, forcing Microsoft to target ways to appease the regulator. In the time since, Microsoft has signed extensive 10-year deals with competitors like Sony, Nintendo, Valve, and NVIDIA. Similar 10-year agreements have also been given to smaller cloud gaming-focused companies like Ubitus and Boosteroid. None of these deals will be impacted by the restructuring with Ubisoft.

“The agreement with Ubisoft has been structured so that Microsoft will still acquire the rights needed to honour fully its legal obligations under its commitments to the European Commission, as well as its existing contractual obligations to other cloud game streaming providers, including Nvidia, Boosteroid, Ubitus, and Nware,” Smith assures.

For now, we wait and see whether this is enough for Microsoft to gain final approval from the CMA prior to finalizing its deal. The CMA is looking over the new deal over the coming weeks. “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,” Sarah Cardell, chief executive of the CMA says. Microsoft and Activision Blizzard have an extended deadline in place, of October 18th. A decision will need to be made prior to that otherwise both parties will have to return to the table and renegotiate terms.

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