Saturday, September 23, 2023
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Home » Microsoft Revamps Activision Deal to Get UK Approval

Microsoft Revamps Activision Deal to Get UK Approval

by Flynn Owen
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Microsoft will sell cloud streaming rights outside of EU to current and new Activision games to a French game studio.

Call of Duty maker Activision Blizzard will sell its streaming rights to Ubisoft Entertainment in a new attempt to win approval from the United Kingdom’s anti-trust regulator for its $69bn sale to Microsoft, the last major hurdle to closing one of the biggest deals in tech history.

Shares of Activision were trading 1.1 percent higher, while Microsoft was up by 0.7 percent before noon in New York. Ubisoft shares listed in Paris closed 8.8 percent higher, the biggest gainer on the pan-European STOXX 600 index.

UK competition regulators have responded by opening a new investigation into Microsoft’s revamped bid.

The Competition and Markets Authority (CMA) said on Tuesday it has until October 18 to decide whether to approve the deal or escalate its preliminary investigation into an in-depth review. The companies agreed earlier to extend the transaction’s deadline to that same date.

Xbox maker Microsoft has been on a quest to acquire Activision, maker of the popular Call of Duty game franchise, since the $69bn deal was announced in January 2022.

The companies have secured approvals from antitrust authorities covering 40 countries, including European Union.

The blockbuster deal faced pushback in the United States but the Federal Trade Commission lost a court fight to stop it, effectively clearing the way for it to proceed.

The purchase is now only held up in the UK, where authorities moved to block it earlier this year over worries about competition being stifled in the emerging cloud gaming market, where players can avoid buying pricey consoles and stream games to their tablets or phones.

After months of back and forth, the CMA said on Tuesday it had stuck by its original decision to veto the deal, forcing Microsoft to come forward with new terms.

Under the restructured deal, Microsoft will not be able to release Activision games like Overwatch and Diablo exclusively on its own cloud streaming service – Xbox Cloud Gaming – or to exclusively control the licensing terms for rival services.

Instead, French gaming rival Ubisoft will acquire the cloud streaming rights for Activision’s existing computer and console games as well as any new games released by Activision in the next 15 years.

That will apply globally but not in Europe, where Brussels had already accepted the original deal. In Europe, Ubisoft will get a non-exclusive licence for Activision’s rights to enable it to offer those games in that region too.

Activision CEO Bobby Kotick said in a blog post that “nothing substantially changes” by selling off the streaming rights.

‘Substantially different’ new proposal

In an unprecedented move, the UK watchdog had delayed its final order to block the deal. That allowed it to consider an EU decision to accept Microsoft’s pledge to automatically license Activision games to cloud gaming platforms as well as a licensing deal between Microsoft and rival Sony, maker of the PlayStation console.

The CMA said on Tuesday that it found those developments would not have changed its original decision and imposed an order to block the deal. At the same time, it is considering the new Microsoft proposal, which “is substantially different from what was put on the table previously”, said Sarah Cardell, CEO of the UK watchdog.

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

The regulator’s decision to launch a new investigation instead of approving the deal was an unexpected move and raises the prospect of another lengthy review, said Alex Haffner, competition partner at the UK law firm Fladgate.

“In reality, however, it is hard to believe Microsoft would have taken this new course without a high degree of confidence it will now in due course (finally) get a regulatory green light from the CMA,” he said by email.

Source : Aljazeera

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