New Microsoft-Activision deal under UK investigation as cloud gaming rights sold to Ubisoft

At a glance

• Original MS/ABK deal confirmed to be blocked by CMA
• New deal under phase one investigation with October 18 deadline
• Ubisoft acquires cloud gaming rights for all Activision Blizzard games

Microsoft's proposed acquisition of Activision Blizzard has been restructured and is once again under investigation – and Ubisoft is now embroiled in the biggest deal in industry history.

Both Microsoft and the Competition and Markets Authority – the UK regulator that blocked the deal earlier this year – announced this morning that a new deal has been submitted for the latter's consideration.

The deal is designed to address the CMA's concerns about Microsoft's dominance in cloud gaming by removing this aspect entirely. Instead, the cloud gaming rights have been divested to an independent third party: Ubisoft.

The Assassin's Creed publisher has been given cloud streaming rights for all current and new Activision Blizzard games released for PC and console, including any releases over the next 15 years.

Ubisoft will be able to commericalise and licence the cloud gaming versions of any of these titles, adding them to any other cloud gaming services around the world, including ones operating on non-Windows operating systems.

Microsoft will take a one-off payment from Ubisoft for these rights, as well as further compensation "through a market-based wholesale pricing mechanism, including an option that supports pricing based on usage."

In a blog post, Microsoft president Brad Smith said: "Under the restructured transaction, Microsoft will not be in a position either to release Activision Blizzard games exclusively on its own cloud streaming service – Xbox Cloud Gaming – or to exclusively control the licensing terms of Activision Blizzard games for rival services."

Smith added that the agreement with Ubisoft has been structured so that, after the acquisition is complete, Microsoft will still acquire the rights needed to honour its legal obligations to the European Commission, which approved the deal earlier this year.

The Xbox firm will also gain the rights needed to honour agreements already made with providers such as Nvidia, Boosteroid, Ubitus and Nware.

With the cloud gaming rights excluded from the deal, both Microsoft and the CMA agree that this is now a substantially different transaction. As such, the CMA has started a new phase one investigation, with a statutory deadline of October 18, 2023 – the same day to which Microsoft's proposed acquisition of Activision Blizzard was extended last month.

The CMA is now inviting comments from any interested parties who wish to share their views on how the newly structured transaction might affect competition in the UK.

"This is not a green light," the regulator's chief executive Sarah Cardell said in a statement. "We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments.

"Our goal has not changed – any future decision on this new deal will ensure that the growing cloud gaming market continues to benefit from open and effective competition driving innovation and choice."

Since the new version of the deal is being treated as separate, the CMA issued a final order confirming the original deal has been blocked "on a worldwide basis."

Microsoft's proposed acquisition of Activision Blizzard has been approved in more than 40 countries, including the European Union – one of three key markets Microsoft needs before the deal can go through.

The UK is another of those markets, with the third being the US, where the Federal Trade Commission has been unable to block the deal.

You can follow the many regulatory hurdles Microsoft and Activision Blizzard have faced in our extensive primer.