In its ongoing bid to alleviate antitrust concerns put forward by the UK's Competition and Markets Authority (CMA), Microsoft has proposed to a key revision to the terms of its $69 billion USD acquisition bid for Activision Blizzard.
As part of its new offer put forward to the CMA, Microsoft will agree to transfer all cloud streaming rights for "all current and new Activision Blizzard PC and console games released over the next 15 years" to third party publisher Ubisoft. Note the wording; the terms will cover Activision titles expected to be released over a 15-year span, but Ubisoft will retain these streaming rights "in perpetuity". It should also be noted that this offer (perhaps unsurprisingly) excludes the European Economic Area (EEA) zone.
This revision is no doubt intended to address the CMA's core complaint against Microsoft's original offer, that being the potential for Microsoft and Activision to establish a monopoly on cloud gaming services for the UK market. According to Microsoft president Brad Smith:
"As a result of the agreement with Ubisoft, Microsoft believes its proposed acquisition of Activision Blizzard presents a substantially different transaction under UK law than the transaction Microsoft submitted for the CMA’s consideration in 2022. 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."
Smith further elaborates on how Ubisoft's collaboration with Microsoft is expected to work for cloud streaming:
"The agreement will enable Ubisoft to innovate and encourage different business models in the licensing and pricing of these games on cloud streaming services worldwide. 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. It will also give Ubisoft the opportunity to offer Activision Blizzard’s games to cloud gaming services running non-Windows operating systems."
The restructured deal essentially sees Microsoft selling the cloud streaming rights for new (and upcoming) Activision games released over the next 15 years to Ubisoft (outside the EEA). Ubisoft in turn will be able to license out applicable Activision titles to other cloud service providers (including Microsoft) as it deems fit. Microsoft is certainly hoping for a warmer reception to its bid from UK regulators through these updated terms. For its part, the CMA promises to "carefully and objectively assess the details of the restructured deal and its impact on competition" in its new Phase 1 investigation into the merger.
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