Microsoft is restructuring its proposed deal with Activision Blizzard to transfer cloud gaming rights for current and new Activision Blizzard games to Ubisoft. The rights transfer is designed to appease regulators in the UK who are concerned about the impact Microsoft’s proposed $68.7 billion deal will have on cloud gaming competition. The restructured deal has triggered a new regulatory investigation in the UK that could last until October 18.
“To address concerns about the impact of the proposed acquisition on cloud gaming streaming raised by the UK Competition and Markets Authority, we are restructuring the transaction to acquire a more limited set of rights.” says Microsoft president Brad Smith. “This includes the execution of an agreement effective upon the close of our merger that transfers cloud streaming rights for all current and new Activision Blizzard games for PC and consoles released over the next 15 years to Ubisoft Entertainment SA, a publisher of world leading games. The rights will be in perpetuity.”
This restructured deal means that if Microsoft closes the proposed deal, it will not be able to release Activision Blizzard games exclusively on Xbox Cloud Gaming. Microsoft will also not be able to exclusively control the license terms for Activision Blizzard games on rival services.
“Ubisoft will compensate Microsoft for the cloud streaming rights to Activision Blizzard games through a one-time payment and through a market-based wholesale pricing mechanism, including an option that supports usage-based pricing. ”explains Smith. “It will also give Ubisoft the opportunity to offer Activision Blizzard games to cloud gaming services running non-Windows operating systems.”
Ubisoft will also add Activision Blizzard games to its Ubisoft Plus Multiple Access subscription, which is available on PC, Xbox, Amazon Luna, and on PlayStation through Ubisoft Plus Classics.
The UK’s Competition and Markets Authority (CMA) first blocked Microsoft’s deal in April citing cloud gaming concerns, before agreeing to negotiations with the Xbox maker following the Federal Trade Commission loss ( FTC) in a US federal court last month. Now, the CMA has signaled a new phase of investigation thanks to Microsoft’s restructured settlement, with a statutory deadline of October 18, the same deadline Microsoft recently agreed to in its settlement closing date extension with Activision. A source familiar with Microsoft’s plans says the edge that the company now doesn’t expect to be able to close its deal with Activision Blizzard until early October.
The CMA has now imposed a final order on Microsoft’s original deal, banning it worldwide while it investigates this new restructuring of the proposed Activision Blizzard acquisition. He CMA notes that “Ubisoft may also, for a fee, require Microsoft to port Activision titles for non-Windows operating systems, such as Linux, if it decides to use or license the cloud streaming rights to Activision titles to a service cloud gaming platform running a non-Windows operating system.”
However, the restructured transaction will not affect Microsoft’s obligations to the European Commission. Microsoft has made several cloud gaming deals and EU regulators approved Activision Blizzard’s deal thanks to a free license for consumers in EU countries that would allow them to stream via “any game streaming service.” in the cloud of your choice” all current and future Activision Blizzard PC and console games for which they have a license.
“The agreement with Ubisoft has been structured so that Microsoft will continue to acquire the rights necessary to fully comply with its legal obligations under its commitments to the European Commission, as well as its existing contractual obligations with other cloud game streaming providers, including Nvidia, Boosteroid, Ubitus and Nware,” says Smith.
The CMA will now evaluate the reworked agreement in the coming weeks and deliver a decision before the October 18 deadline. “This is not a green light. We will carefully and objectively evaluate the details of the restructured agreement and its impact on competition, including in light of third-party feedback,” says Sarah Cardell, CEO of CMA. “Our goal has not changed: any future decisions on this new agreement will ensure that the growing cloud gaming market continues to benefit from open and effective competition that drives innovation and choice.”