Microsoft plans to divest cloud gaming privileges for Activision to Ubisoft in an effort to gain approval in the UK

Microsoft plans to divest cloud gaming privileges for Activision to Ubisoft in an effort to gain approval in the UK

Microsoft is altering its proposed deal with Activision Blizzard by transferring the rights for cloud gaming of existing and upcoming games from Activision Blizzard to Ubisoft. This modification is aimed at addressing concerns raised by UK regulators regarding potential competition issues stemming from Microsoft’s planned $68.7 billion acquisition. The revised deal has prompted a new regulatory inquiry in the UK, which is expected to conclude by October 18th.

To alleviate worries about the impact on cloud game streaming expressed by the UK’s Competition and Markets Authority (CMA), Microsoft is adjusting the transaction to acquire a more limited set of rights. This involves an agreement that will grant Ubisoft Entertainment SA, a prominent global game publisher, perpetual control over cloud streaming rights for all current and future Activision Blizzard PC and console games for the next 15 years. This shift ensures that Microsoft cannot exclusively offer Activision Blizzard games on its Xbox Cloud Gaming platform, nor exclusively dictate the licensing terms for these games on competing services. Instead, Ubisoft will oversee the cloud streaming rights for these games outside the EU and will license the titles back to Microsoft for inclusion in Xbox Cloud Gaming.

Under this restructured arrangement, Ubisoft will compensate Microsoft through a one-time payment and a market-based wholesale pricing system, which may involve usage-based pricing. Additionally, Ubisoft will have the option to make Activision Blizzard games available to cloud gaming services running non-Windows operating systems. These games will also be incorporated into Ubisoft’s Ubisoft Plus Multi Access subscription, accessible on PC, Xbox, Amazon Luna, and PlayStation via Ubisoft Plus Classics.

Following the initial rejection of Microsoft’s deal by the CMA due to cloud gaming concerns, negotiations commenced after the Federal Trade Commission’s loss in a US federal court. Microsoft’s revised deal has now triggered a new phase of investigation by the CMA, with a deadline set for October 18th. This aligns with the extended deal closing date agreed upon by Microsoft and Activision.

The CMA has issued a final order to halt Microsoft’s original deal worldwide as it scrutinizes the revised transaction. Notably, the CMA mentions that Ubisoft can request Microsoft to adapt Activision’s titles for non-Windows operating systems, such as Linux, for a fee, if Ubisoft chooses to provide cloud streaming rights to non-Windows cloud gaming services.

The altered agreement will not impact Microsoft’s commitments to the European Commission, as it had previously secured EU approval for the deal by providing a free license to EU consumers, enabling them to stream Activision Blizzard games via any cloud game streaming service of their choosing.

The CMA will evaluate the adjusted deal in the following weeks and announce a decision by the October 18th deadline. The agency’s objective remains unchanged—to ensure that healthy competition thrives in the growing cloud gaming market, fostering innovation and choice.