Microsoft has submitted a revised deal to buy games publisher Activision for regulatory clearance following the UK’s decision to block its original $68bn proposal.
In April, the Competition and Markets Authority found that while the deal would not reduce competition in the UK’s wider console market, it would reduce innovation and mean less choice for gamers in the nascent cloud gaming sector.
The decision to block the deal prompted loud complaints from the US computing giant and also differed from the European Commission’s later decision to give its approval for the tie-up. A bid by US regulators to block the deal failed.
Today the CMA has formalised its refusal through the issuing of a ‘Final Order’ which “prohibits the original deal on a worldwide basis”.
It’s also opened a new inquiry into the restructured deal.
Under the terms of the latest deal, Microsoft will not acquire cloud gaming rights for any existing Activision games, or for any new games released by the firm during the next 15 years.
Instead, these rights will be sold to rival games publisher Ubisoft which would be free to supply Activision’s titles to any cloud gaming service provider, including Microsoft, under any terms or business model it wishes.
Ubisoft could also force Microsoft to provide versions of games on operating systems other than Windows.
These provisions would apply globally except in the European Economic Area in light of Microsoft’s existing undertakings to the European Commission as part of its approval for the original deal.
Microsoft President Brad Smith says the transfer of rights “will be in perpetuity” and means that “Microsoft will not be in a position either to release Activision Blizzard games exclusively on its own cloud streaming service—Xbox Cloud Gaming – or to exclusively control the licensing terms of Activision Blizzard games for rival services.”
The CMA says the new inquiry will be carried out in line with its usual processes and that it has until 18th October to complete its assessment of the deal.
Sarah Cardell, Chief Executive of the CMA, said “The CMA has today confirmed that Microsoft’s acquisition of Activision, as originally proposed, cannot proceed.
“Separately, Microsoft has notified a new and restructured deal, which is substantially different from what was put on the table previously. As part of this new deal, Activision’s cloud streaming rights outside of the EEA will be sold to a rival, Ubisoft, who will be able to license out Activision’s content to any cloud gaming provider.
“This will allow gamers to access Activision’s games in different ways, including through cloud-based multigame subscription services. We will now consider this deal under a new Phase 1 investigation.
“This is not a green light. 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.”