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

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. 

CMA confirmed that this new agreement was presented to them, but noted they have not yet given the deal their 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 objectively and carefully assess the restructured transaction and its effect on competition. This includes taking into consideration 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. The proposal, it says, has received approval in more than forty 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’s Bobby Kotick, the CEO of the company shared today the following information with them: 

“Team,

Want to give you an update about the merger between Microsoft and our company?

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. 

The addition of the divestiture does not change anything for us: the merger agreement we have with Microsoft, the closing date, and the amount to be paid per Activision Blizzard stock at the closing all remain unchanged. The CMA and Microsoft will be working closely together throughout the rest of the process. 

Our integration management team has been working hard to prepare for a successful close. It’s a major, cross-functional, collaborative effort, and I am thankful for all the work that’s being done. 

The journey has been longer than anticipated, but I am proud to see how everyone remained focused on producing great games. Thank you for your dedication to our players. 

“More to Come”

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.

What do you think about Ubisoft’s handling of the Activision Blizzard streaming games in the U.K. Tell us what you think in the comments!