The major hurdle in the deal arose from cloud gaming concerns.
Microsoft initially intended to purchase Activision cloud gaming rights, and the CMA thought this would shift competition dynamics in Microsoft’s favor. To ensure the deal went through, Microsoft revised the terms of the deal, suggesting that the cloud gaming rights be transferred to Ubisoft instead.
Microsoft CEO Phil Spencer said the following regarding the move: “A positive development and a welcome indicator that our hard work is bringing us closer to our goal.” The new proposed deal was convincing enough to shift the CMA’s perspective and agree to a deal stunted since January 2022.
“The CMA considers that the restructured deal makes important changes that substantially address the concerns it set out in relation to the original transaction earlier this year,” cited the regulator during a press release.
By divesting the cloud gaming rights to the French game publishing firm Ubisoft, Microsoft gained approval. The CMA said the following regarding the step: “It will allow Ubisoft to offer Activision’s content under any business model, including through multigame subscription services. It will also help to ensure that cloud gaming providers can use non-Windows operating systems for Activision content, reducing costs and increasing efficiency.”
Understanding the essentiality of cloud gaming rights is imperative to understanding why the CMA was hesitant to pass the deal. While gaming has transpired over the years, cloud gaming is a nascent space with numerous potential.
Activision Blizzard has manufactured some exclusive game titles, including Call of Duty. If Microsoft were to acquire these rights, several regulators were worried that it might take these titles and make them available solely on Xbox. That’s where the competition monopoly comes in.
Cloud gaming has poised itself as the future of gaming, eliminating several factors that will fade into the background with its furtherance. For instance, players won’t need to acquire high-end consoles to stream the game at their convenience.
While other major regulators like the European Union had already cleared the deal in May, the CMA stood by their decision until their concessions were met. Another factor that slowed down the CMA to acceptance was that the terms offered to the EU by Microsoft would allow them to pioneer the industry for the next decade.
Microsoft and the CMA agreed that Microsoft wouldn’t acquire the rights to existing Activision games for the next one and a half decades. The CEO of the CMA, Sara Cardell, had the following remarks: “With the sale of Activision’s cloud streaming rights to Ubisoft, we’ve made sure Microsoft can’t have a stranglehold over this important and rapidly developing market.”
The regulation authority also takes credit for being the only body to ensure that gamers globally will enjoy fair prices and superior services based on this move.
The CMA cited that the whole process dragged on because of Microsoft’s unwavering desire to meet its requirements. “Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn’t work. Dragging out proceedings in this way only wastes time and money,” Cardell highlighted.
Upon acceptance, both parties came to a reasonable solution benefiting all parties, gamers included. Activision CEO Bobby Kotick expressed his delight over an employee briefing highlighting how pleased the company is with the merger.
“This is a significant milestone for the merger and a testament to our solutions-oriented work with regulators,” cited Bobby. After crossing the last obstacle, even Microsoft president Brad Smith took to X previously Twitter and posted the following, “We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide,”
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One major point Microsoft has been trying to major in is that it doesn’t intend to make the games exclusive. It displayed this concern to the CMA and even fellow rivals.
They did so by signing a deal allowing them to introduce Xbox titles to Nvidia and another to bring Call of Duty to Nintendo Plus. These actions show that the company has no intentions of switching up competition; however, in the end, they had to compromise the rights.
Microsoft’s deal to merge with Activision will ensure gamers globally enjoy the benefits the corporate giants bring. Ubisoft will equally gain more traction from the cloud gaming rights acquired from Activision, making the competitive plane healthy.
