Activision Blizzard strikes a streaming deal with Ubisoft in order to overcome regulatory hurdles in its acquisition of Microsoft.
Activision Blizzard has taken a crucial step toward obtaining regulatory approval for its $69 billion sale to Microsoft. Ubisoft Entertainment has agreed to buy the gaming company’s streaming rights.
Regulatory Obstacles and Microsoft’s Purchase
Microsoft revealed its massive gaming transaction in early 2022, but the acquisition was met with criticism from Britain’s antitrust commission. Concerns have been expressed about Microsoft gaining undue influence in the developing cloud gaming business.
Ubisoft’s Role and Revised Terms
Following a lengthy period of negotiation and discussion, the UK’s Competition and Markets Authority (CMA) upheld its original judgment to ban the acquisition. As a result, Microsoft devised new terms to answer the regulator’s concerns.
Microsoft will no longer have the exclusive right to release Activision games, including famous titles like “Overwatch” and “Diablo,” on its own cloud streaming service, Xbox Cloud Gaming, under the updated arrangement. It also cannot have monopoly power over license conditions for rival services.
Instead, Activision’s existing PC and console games, as well as any future games created by Activision over the next 15 years, will be acquired by Ubisoft, a French gaming business. Except in Europe, where the European Commission had approved the original transaction, this arrangement will apply everywhere.
Prospects and Legal Implications
Ubisoft will have a non-exclusive license to Activision’s rights in Europe, allowing it to offer these games in the region. Legal experts feel that these concessions increase the likelihood that the deal will go through as planned. They do, however, warn that it is still subject to regulatory approval.
Microsoft expressed confidence that the CMA will consider its updated proposal, which differs significantly from the original, by October 18, 2023. The CMA will evaluate the new arrangement using its regular procedure, with a Phase 1 examination expected to be completed by the October deadline. If competition concerns persist, a more extensive Phase 2 investigation may be launched.
The lengthy regulatory process has already resulted in a three-month postponement of the deal deadline, which has been pushed out to October 18. Microsoft’s recent concessions represent a success for the CMA, which has taken a tough position on technology agreements since obtaining independence following Brexit.
Despite opposition from the US Federal Trade Commission, the European Union accepted the deal after Microsoft agreed to license Activision’s titles to other platforms. The CMA declared its intention to prohibit the transaction in April, but restarted its probe in July when Microsoft claimed to have made improvements.
The CMA’s goal is to ensure that the expanding cloud gaming sector thrives through free and effective competition, driving innovation and giving options for players. Following this huge development, Ubisoft’s stock increased by more than 7%.
