Microsoft to Sell Its Activision Streaming Rights To Ubisoft Entertainment

“Call of Duty” developer Activision Blizzard has unveiled a strategic move in its quest for approval from the UK’s anti-trust regulator regarding its mammoth $69 billion sale to Microsoft. The gaming world was set abuzz as news broke that Activision would be relinquishing its streaming rights to another gaming giant, Ubisoft Entertainment, in a bid to address concerns raised by Britain’s competition regulator. While shares of Activision and Microsoft experienced a modest uptick of 1.1% and 0.7%, respectively, Ubisoft emerged as the star of the day, with its shares soaring 8.8% and securing the top spot on the pan-European STOXX 600 index’s gainers.

Back in the annals of early 2022, Microsoft dropped a game-changing bombshell by announcing a colossal gaming deal, the most significant in history. However, this audacious acquisition was swiftly met with a roadblock when Britain’s competition watchdog intervened, apprehensive that the US tech behemoth could wield an outsized influence over the burgeoning cloud gaming sector.

Months of negotiations and consultations ensued, culminating in a recent statement from the Competition and Markets Authority (CMA) affirming its initial decision to nix the deal. This sent Microsoft scrambling to recalibrate its terms in a last-ditch effort to placate the regulator.

The rejigged agreement showcases a pivotal shift. No longer will Microsoft enjoy the luxury of exclusive rights to stream Activision’s blockbuster titles like “Overwatch” and “Diablo” on its proprietary cloud gaming service, Xbox Cloud Gaming. Nor will it exercise full dominion over licensing terms for competing platforms. Enter Ubisoft, a formidable player in the gaming realm. The French gaming giant will swoop in to acquire cloud streaming rights for Activision’s existing PC and console games, along with any new releases from the company over the next 15 years.

This arrangement casts a global net, save for Europe, where the original deal was greenlit by the European Commission in Brussels. In the Old Continent, Ubisoft secures a non-exclusive license to offer Activision’s games, ensuring a competitive marketplace.

The European Union’s anti-trust watchdog is keeping a keen eye on the unfolding drama. A spokesperson remarked that they are evaluating whether Microsoft’s maneuver to gain UK approval might have ramifications for its pledges to the European Commission.

Legal experts are optimistic about the outcome, with some echoing the sentiment that this revised deal could see the light of day. Tom Smith, a partner at law firm Geradin Partners, stated that while the path has been tumultuous, the wheels now seem to be turning in favor of the deal. However, he emphasized that in today’s regulatory climate, one cannot assume that major tech transactions will breeze through approvals without challenges.

In a confident stride, Microsoft articulated its belief that the new proposal marks a “substantial” departure from the earlier deal. The tech titan anticipates that the CMA will meticulously review the updated terms by October 18. The CMA, in turn, announced that it will subject the proposal to its standard scrutiny, involving a Phase 1 process set to conclude on the said date. Should lingering concerns persist regarding competition implications, a more protracted Phase 2 assessment could come into play.

The interplay between the two American giants hasn’t been without delays, as the deadline for the deal has been extended by three months to accommodate the intricate regulatory proceedings. Alex Haffner, a competition partner at UK law firm Fladgate, posited that Microsoft wouldn’t have embarked on this alternative route if it didn’t have a strong conviction about surmounting the UK regulator’s scrutiny within the revised timeline.

CMA Chief Executive Sarah Cardell iterated the regulator’s unwavering goal: to ensure a vibrant cloud gaming sector characterized by healthy competition, innovation, and options. This revised deal, with its pronounced concession by Microsoft, stands as a testament to the CMA’s rigorous stance as an independent regulatory body post-Brexit.

Yet, amid this intricate dance between regulators and tech giants, a cloud of uncertainty has permeated the regulatory landscape. Legal experts argue that the incongruence between different regulatory bodies, such as the CMA and the European Commission, coupled with the back-and-forth negotiations, has introduced unprecedented ambiguity. While the Federal Trade Commission in the US also raised objections, its efforts to block the deal have been in vain. In contrast, the European Union welcomed the deal after embracing Microsoft’s commitments to licensing Activision’s games on diverse platforms.

This saga began its dramatic overture in April when the CMA first raised its voice against the deal and braced itself for a court showdown to defend its stance. Now, as the curtain rises on this latest act, the stage is set for a pivotal scene: a thorough evaluation by the CMA of Microsoft’s revised proposition, a moment that could redefine the contours of the gaming industry’s landscape for years to come.

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