Microsoft-Activision Merger: UK Regulator Reviews Microsoft's Restructured Deal with Ubisoft

John Lopez, Tech Times 22 August 2023, 10:08 am

The UK Competition and Markets Authority (CMA) has upheld its decision to block the controversial $68.7 billion Microsoft-Activision merger, citing concerns about potential monopolistic control of the cloud gaming market.

Despite the setback, PCMag reports that Microsoft has unveiled a restructured proposal aimed at addressing the regulatory body's reservations.

This revised deal hinges on a strategic partnership with game publisher Ubisoft, allowing the tech giant to sidestep the CMA's objections.

Microsoft's New Collaboration with Ubisoft

TechCrunch tells us in a report that under the newly structured agreement, Ubisoft is set to obtain cloud streaming rights to all of Activision Blizzard's current and upcoming PC and console games for the next 15 years

Significantly, this includes non-exclusive rights to stream within the European Economic Area (EEA) in perpetuity. This maneuver strategically circumvents the CMA's apprehensions about Microsoft's potential market dominance.

Brad Smith, Microsoft's President, explained the company's position, stating, "As a result of the agreement with Ubisoft, Microsoft believes its proposed acquisition of Activision Blizzard presents a substantially different transaction under UK law than the transaction Microsoft submitted for the CMA's consideration in 2022."

CMA Starts New Investigation

The CMA, while acknowledging the restructured deal as "substantially different," has not given it a green light.

Sarah Cardell, Chief Executive of the CMA, affirmed, "This is not a green light. 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," Cardell emphasized.

The regulator's new Phase 1 investigation is aimed at evaluating the intricacies of the restructured agreement, scrutinizing its potential implications for the competitive landscape of cloud gaming.

The CMA intends to engage third-party perspectives in its assessment before reaching a final decision.

A Closer Look: Ubisoft's Involvement, Different Stances

Ubisoft's involvement in this new deal signifies a collaborative effort to maintain a balanced market and ensure that Microsoft does not wield disproportionate control over cloud gaming.

This strategic maneuver demonstrates an innovative solution to regulatory challenges, fostering healthy competition while allowing gamers diverse ways to access their favorite titles.

Microsoft's ambition to complete the acquisition of Activision Blizzard by October 18 remains intact, aligned with the CMA's review timeline.

The regulator's decision stands in stark contrast to that of the European Union, which gave the mega-merger its approval. Likewise, US courts prevented the Federal Trade Commission (FTC) from impeding the deal. These divergent regulatory stances further complicate an already intricate landscape.

The outcome of the restructured proposal and the subsequent CMA review will significantly impact the trajectory of the gaming industry. The proposal's unique structure aims to ensure open competition and prevent undue market control.

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