Microsoft presents UK with new deal to buy Activision Blizzard

The Microsoft logo is seen on a smartphone placed on Activision Blizzard’s game character.

Dice Ruvic | Reuters

Microsoft It submitted a new deal to UK regulators for takeover on Tuesday Activision Blizzard after his initial offer was rejected.

The US tech giant first floated a $69 billion acquisition of Activision in January 2022, but has since faced regulatory challenges in the US, Europe and the UK.

On Tuesday, the UK’s Competition and Markets Authority confirmed it had blocked the original deal. However, both Microsoft and Activision have agreed to a new, restructured contract, and the CMA said it will review the decision by October 18.

The Redmond tech giant expects the investigation to be completed by then, Microsoft President Brad Smith said in a statement on Tuesday.

Under the restructured agreement, Microsoft will not acquire cloud rights for existing Activision PC and console games or new games released by Activision for the next 15 years, the CMA said.

Instead, these rights will be transferred to a French game publisher Ubisoft Entertainment CMA added before Microsoft’s purchase of Activision.

Ubisoft shares rose more than 4% in early European trade.

CMA blockade

The CMA has been the harshest critic of the takeover, citing concerns that the deal would hamper competition in the nascent cloud gaming market.

Cloud gaming appears to be the next frontier in the industry, which offers subscription services that allow people to stream games like movies or shows. Netflix. It could even eliminate the need for expensive consoles, with users playing games on PCs, mobiles and TVs instead.

Regulators previously argued that Microsoft could also take core Activision games like Call of Duty and make them exclusive to Xbox and other Microsoft platforms.

Authorities in the European Union became the first major regulator to cancel the deal in May. To bridge the gap, Microsoft has offered concessions such as offering royalty-free licenses to cloud gaming platforms to stream Activision games if the consumer buys them.

The CMA rejected similar measures at the time, which it said would allow Microsoft to “set the terms for this market for the next decade”.

In the US, the Federal Trade Commission was fighting a legal battle with Microsoft to reverse its takeover of Activision. However, a judge in July blocked the FTC’s attempt to do so, clearing the way for the deal to proceed in the US.

Hours later, the CMA said it was “willing to consider any proposal from Microsoft to restructure the operation”, allaying the regulator’s concerns.

Microsoft’s new UK offering

The restructured deal and the transfer of cloud rights to Ubisoft are intended to allow the independent third-party content provider to make Activision’s game content available to all cloud game service providers, including Microsoft itself.

Ubisoft will be able to license Activision content under various business models, including subscription services.

The deal will also require Microsoft to provide versions of the games on operating systems other than Windows, which it owns.

“Microsoft has announced a new and restructured deal that is significantly different from what was previously on the table,” said CMA CEO Sarah Cardell.

“As part of this new deal, Activision’s cloud streaming rights outside of the EEA (European Economic Area) will be sold to competitor Ubisoft. It will be able to license Activision’s content to any cloud gaming provider. This will allow players to access Activision games in a variety of ways. , including through cloud-based multiplayer subscription services.”

Cardell emphasized that this does not signal approval of the deal.

“This is not a green light. We will carefully and objectively evaluate the details of the restructured deal and its impact on competition, including in light of third-party comments.”

In turn, Microsoft will be compensated for its concession to Ubisoft through a one-time payment and a market-based wholesale pricing mechanism, including an option to support usage-based pricing. It will also allow Ubisoft to offer Activision. Blizzard’s games to cloud gaming services that run on non-Windows operating systems,” Smith said Tuesday.

“We are committed to delivering amazing experiences to our players wherever they choose to play,” said Chris Early, Ubisoft’s senior vice president of strategic partnerships and business development. “Today’s deal will give players even more opportunities to access and enjoy some of the biggest brands in gaming.”

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