Microsoft Submits New Deal for Takeover of Activision Blizzard
Microsoft’s Revised Proposal
Microsoft has submitted a new deal for the acquisition of Activision Blizzard, following the rejection of its initial proposal by U.K. regulators. The technology giant originally offered $69 billion for the takeover in January 2022, but has faced regulatory challenges in the U.S., Europe, and U.K.
The U.K.’s Competition and Markets Authority (CMA) confirmed the blocking of the original deal. However, Microsoft and Activision have agreed to a restructured agreement, which will now be investigated by the CMA with a decision deadline of Oct. 18. Microsoft President Brad Smith expects the review to be completed earlier.
Under the revised deal, Microsoft will not acquire cloud rights for existing and new Activision games. These rights will be divested to French game publisher Ubisoft Entertainment before Microsoft’s acquisition of Activision.
Ubisoft shares saw an increase of over 4% in early European trade.
CMA’s Concerns
The CMA has been the most critical regulator of the takeover, expressing concerns about potential competition limitations in the emerging cloud gaming market. Cloud gaming allows users to stream games through subscription services, eliminating the need for expensive consoles. The CMA previously argued that Microsoft could make key Activision games exclusive to Xbox and other Microsoft platforms.
The European Union cleared the deal in May after Microsoft offered concessions, including royalty-free licenses for cloud gaming platforms to stream Activision games. However, the CMA refused similar measures, fearing Microsoft’s dominance in the market.
In the U.S., the Federal Trade Commission attempted to halt the takeover but was blocked by a judge in July. The CMA expressed its readiness to consider Microsoft’s proposals to address its concerns.
Microsoft’s New Proposal to the U.K.
The restructured deal involves divesting cloud rights to Ubisoft, enabling them to supply Activision’s gaming content to all cloud gaming service providers, including Microsoft. Ubisoft will also have the ability to license out Activision content under different business models.
Microsoft will be compensated through a one-off payment and a market-based wholesale pricing mechanism. The deal also requires Microsoft to provide game versions for operating systems other than Windows.
The CMA’s CEO, Sarah Cardell, emphasized that the new deal is not an approval but will be carefully assessed for its impact on competition. Ubisoft’s senior vice president, Chris Early, expressed excitement about the opportunities the deal will provide for players to access and enjoy popular gaming brands.
