Microsoft pushes to get Activision deal done with fresh UK offer

The shares of Activision were trading 1.1% higher, while Microsoft was up 0.7% before noon in New York. Shares of Ubisoft listed in Paris closed 8.8% higher. Ubisoft was the biggest gainer on the pan-European STOXX 600 index.

In January 2022, Microsoft announced its biggest gaming deal in history, but the acquisition was blocked by UK Competition and Markets Authority. The British anti-trust regulator was concerned the US computing giant would gain too much control of the nascent cloud gaming market.

In a rare move, the Competition and Markets Authority said it was reconsidering the offer from Microsoft after it said it would sell the rights of all current and future Activision games released during the next 15 Ubisoft Entertainment SA. The divestment doesn’t include the European Economic Area, the CMA said.

Under the restructured deal, Microsoft will not be able to release Activision games like “Overwatch” and “Diablo” exclusively on its own cloud streaming service — Xbox Cloud Gaming – or to exclusively control the licensing terms for rival services. Instead, French gaming rival Ubisoft will acquire the cloud streaming rights for Activision’s existing PC and console games, and any new games released by Activision in the next 15 years.

That will apply globally but not in Europe, where Brussels had already accepted the original deal. In Europe, Ubisoft will get a non-exclusive licence for Activision’s rights to enable it to offer those games in that region too.

Microsoft said on Tuesday it believed its new proposal was “substantially different” and it expected it to be reviewed by the CMA by Oct. 18.

The CMA said it would examine the new deal under its usual system, with a Phase 1 process ending on Oct. 18. If it still has concerns about the impact on competition, the CMA could open a much longer Phase 2 examination.

The two American companies have already extended the deal deadline – pushing it back by three months to Oct. 18 – after the regulatory process took longer than expected.

Alex Haffner, competition partner at UK law firm Fladgate, said he did not believe Microsoft would have taken this new step if it did not believe it would be able to get the new deal past the British regulator by Oct. 18.

CMA Chief Executive Sarah Cardell said the UK regulator would now look closely at the new deal, including seeking the thoughts of third parties.

Updated: 22 Aug 2023, 10:46 PM IST