Microsoft revamps Activision Blizzard deal over UK demands

Microsoft restructured its $69 billion deal to buy game developer Activision Blizzard to give cloud gaming rights to the company Ubisoft as the tech giant aims to get approval from U.K. regulators. 

The restructuring, announced Tuesday, will give video game developer Ubisoft the ability to distribute games through cloud streaming. Ubisoft will “compensate Microsoft” for the cloud streaming rights to Activision Blizzard’s games through a “one-off payment” and “market-based whole pricing mechanism,” Microsoft’s vice chairman and president Brad Smith said in a blog post. 

In doing so, Microsoft aims to gain approval of the U.K.’s Competition and Markets Authority (CMA), which raised concerns about how the acquisition would impact cloud game streaming. 

“Under the restructured transaction, Microsoft will not be in a position either to release Activision Blizzard games exclusively on its cloud streaming service — Xbox Cloud Gaming — or to exclusively control the licensing terms of Activision Blizzard games for rival services,” Smith wrote. 

The CMA said it opened a new investigation into the restructured deal Tuesday. The new probe will be carried out in line with CMA’s “usual Phase 1 process” and the statutory deadline for a decision is Oct. 18, the British regulator said. 

“This is not a green light,” Sarah Cardell, chief executive of the CMA 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,” Cardell added. “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.”

Ubisoft announced the new agreement and said it will allow games, such as the popular Call of Duty, to land on its Ubisoft+ service, as well as the ability to license them to other cloud gaming companies, service providers and console makers. 

In a note to employees, Activision CEO Bobby Kotick said that “for us, nothing substantially changes with the addition of this divestiture: our merger agreement with Microsoft, closing deadline, and the cash consideration to be paid for each Activision Blizzard share at closing remain the same.”

“We will continue to work closely with Microsoft and the CMA throughout the remaining review process, and we are committed to help Microsoft clear any final hurdles as quickly as possible,” he added.