In order to address regulatory concerns in the UK, Microsoft has restructured the terms of its acquisition of $68.7 billion Activision Blizzard to transfer its cloud streaming rights to a third party.
The new deal would see French game developer Ubisoft take charge of all cloud streaming rights to current and future Activision Blizzard games on PC and console. Ubisoft is one of the larger video game companies that’s still independent, and is known for franchises such as Rainbow Six, Assassin’s Creed, and Far Cry.
The announcement came via an entry on the official Microsoft blog by vice chair and president Brad Smith.
“To address the concerns about the impact of the proposed acquisition on cloud game streaming raised by the UK Competition and Markets Authority, we are restructuring the transaction to acquire a narrower set of rights,” said Microsoft President Brad Smith.
Under the terms of the new deal, Microsoft yields the right to publish Activision Blizzard games such as Call of Duty or Overwatch as exclusives on Xbox Cloud Gaming. Ubisoft will have the full rights to commercialize Activision Blizzard games, with compensation going back to Microsoft via “a one-off payment and through a market-based wholesale pricing mechanism,” according to Smith.
Ubisoft’s cloud gaming initiatives include a self-named subscription service that lets users stream Ubisoft games like Assassin’s Creed: Valhalla from its own servers. It also maintains a premium channel by the same name as part of Amazon’s Luna storefront.
The UK’s Competition and Markets Authority (CMA) had previously blocked Microsoft’s bid to acquire Activision Blizzard in April. One of its stated reasons for doing so was the fear that the acquisition would allow Microsoft to instantly dominate the cloud gaming service, citing an estimate that without Activision Blizzard, Microsoft already controls a 60-to-70% share of that market.
The ball is now in the CMA’s court, with Smith stating he and Microsoft are confident that the review process will be complete before the original acquisition’s extended deadline of Oct. 18.
“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. 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.”
Microsoft cleared a major hurdle in the acquisition last month when a federal judge sided with the Redmond company following a challenge from the U.S. Federal Trade Commission to block the merger. An appeals court then denied a FTC motion to temporarily stop the deal.
