Microsoft has submitted a revised deal to U.K. regulators for the acquisition of Activision Blizzard after its initial proposal was rejected. The tech giant faced regulatory challenges in the U.S., Europe, and the U.K. The Competition and Markets Authority in the U.K. confirmed the blockage of the original deal but stated that both Microsoft and Activision have agreed to a restructured agreement. The CMA will now investigate the new deal with a decision deadline of Oct. 18. Microsoft President Brad Smith is optimistic that the review can be completed before the deadline.
Under the restructured deal, Microsoft will not acquire cloud rights for existing Activision PC and console games, nor for new games released by Activision over the next 15 years. Instead, these rights will be divested to Ubisoft Entertainment prior to Microsoft’s acquisition of Activision.
The CMA has been particularly critical of the takeover, citing concerns about competition in the cloud gaming market. Cloud gaming is seen as the future of the industry and offers subscription services that allow users to stream games without the need for consoles. Regulators were concerned that Microsoft would make key Activision games exclusive to Xbox and other Microsoft platforms.
In the U.S., the Federal Trade Commission initially tried to block the Activision takeover but was unsuccessful. The CMA, however, expressed its willingness to consider Microsoft’s proposals to address the regulator’s concerns.
The restructured deal and divestment of cloud rights to Ubisoft aim to ensure an independent third-party supplier can provide Activision’s gaming content to all cloud gaming service providers. Ubisoft will be able to license out Activision content under different business models, including subscription services. The deal would also require Microsoft to provide game versions on operating systems other than Windows.
Sarah Cardell, CEO of the CMA, stated that the new deal is substantially different and highlighted the divestment of Activision’s cloud streaming rights to Ubisoft. She emphasized that this is not an approval for the deal and that the CMA will carefully assess the details and its impact on competition.
Microsoft will be compensated for the divestment to Ubisoft through a one-off payment and a market-based wholesale pricing mechanism. This includes an option for pricing based on usage, and it allows Ubisoft to offer Activision Blizzard’s games to cloud gaming services running non-Windows operating systems, according to Brad Smith.
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