Microsoft Makes An Unexpected Concession With Rival Ubisoft To Win Activision Deal
If you're against the Microsoft purchase of Activision-Blizzard-King, what would be some potential reasons that you might present in a court to convince the judge that the deal shouldn't proceed? Would you talk about Call of Duty, or perhaps the massive back catalog of beloved IPs held by ABK? Or would you focus on the controversial cloud gaming market?
If you're all-in on the cloud gaming argument, then you must be from the UK's Competition and Markets Authority (CMA). A similar agency to the United States' Federal Trade Commission (FTC), the CMA has so-far blocked Microsoft's purchase attempt in the UK despite its approval everywhere else, and the reason that it cites is that it is concerned that the House of Xbox will hold too much sway over the cloud gaming market.
So far, the deal is blocked in the UK, so Microsoft has had to to adjust the terms of the proposal before the CMA will re-evaluate it. The restructured deal awards French publishing house Ubisoft the rights to release Activision's current and future PC and console games to cloud streaming services for the next 15 years.
This means that if Microsoft wants to offer those games using cloud streaming, it has to license the rights to do so from Ubisoft—ironically, everywhere except Europe, where the EU had already accepted the original deal. Instead, Ubisoft will get a non-exclusive license to stream Activision's games in that region.
It's a bizarre deal, and if you're a cloud gaming believer, it likely looks like an insane move on the part of Microsoft. For the next 15 years, every game ever released by the publishing conglomerate will only be available on cloud streaming services if Ubisoft allows it. Aside from the aforementioned Europe exclusion, this deal is global, so it affects everyone outside of Europe.
However, from a more cynical perspective, this concession to the UK CMA could be seen as Microsoft tacitly admitting that it doesn't really believe in the future of cloud gaming. We won't go into all the issues with cloud gaming here; that's outside the scope of this post. The technology hasn't been the blowout hit with gamers that some have predicted, though; cloud gaming revenues in 2022 were less than 0.5% of the global gaming market.
As far as whether this change will make the CMA happy and finally allow Microsoft's purchase to go through, it's not completely clear yet. Reuters quotes the CMA's former legal director Tom Smith as saying that "there's still possibly scope for the wheels to come off," but that ultimately he thinks the deal will go through now. For Microsoft's part, it says it believes the CMA will review its new proposal by October 18th.