New Microsoft/Activision deal addresses previous CMA concerns in cloud gaming
While the CMA has recognized restricted residual concerns with the brand new deal, Microsoft has put ahead cures which the CMA has provisionally concluded ought to deal with these points.
The CMA is now consulting on the cures earlier than making a last resolution.
The new deal
Earlier this 12 months, the CMA blocked Microsoft from buying the entire of Activision as a result of concerns that the deal would hurt competitors in cloud gaming in the UK. After that deal was blocked, Microsoft submitted a restructured transaction in August for the CMA to assessment.
Under that new deal, Microsoft won’t buy the cloud gaming rights held by Activision, which is able to as a substitute be offered to an unbiased third get together, Ubisoft Entertainment SA (Ubisoft), earlier than the deal is accomplished.
The prior sale of the cloud gaming rights will set up Ubisoft as a key provider of content material to cloud gaming companies, replicating the function that Activision would have performed in the market as an unbiased participant.
In distinction to the unique deal, Microsoft will now not management cloud gaming rights for Activision’s content material, so wouldn’t be in a place to restrict entry to Activision’s key content material to its personal cloud gaming service or to withhold these video games from rivals. Unlike the cures the CMA beforehand rejected, Ubisoft shall be free to supply Activision’s video games each on to shoppers and to all cloud gaming service suppliers nonetheless it chooses, together with for buy-to-play or multigame subscription companies, or any new mannequin for offering content material which may emerge because the market develops. The deal with Ubisoft additionally requires Microsoft to port Activision video games to working techniques aside from Windows and help sport emulators when requested, addressing the opposite fundamental shortcoming with the previous cures bundle.
Today’s resolution
The CMA considers that the restructured deal makes essential modifications that considerably deal with the concerns it set out in relation to the unique transaction earlier this 12 months.
In specific, the sale of Activision’s cloud streaming rights to Ubisoft will forestall this essential content material – together with video games resembling Call of Duty, Overwatch, and World of Warcraft – from coming underneath the management of Microsoft in relation to cloud gaming. The CMA initially discovered that Microsoft already has a robust place in cloud gaming companies and will have used its management over Activision content material to stifle competitors and reinforce this place. The new deal as a substitute outcomes in the cloud streaming rights for Activision’s video games being transferred to an unbiased participant, Ubisoft, sustaining open competitors as the marketplace for cloud gaming develops over the approaching years.
While the restructured deal is materially totally different to the previous transaction and considerably addresses most concerns, the CMA has restricted residual concerns that sure provisions in the sale of Activision’s cloud streaming rights to Ubisoft may very well be circumvented, terminated, or not enforced.
To deal with these concerns, Microsoft has supplied cures to make sure that the phrases of the sale of Activision’s rights to Ubisoft are enforceable by the CMA. The CMA has provisionally concluded that this extra safety ought to resolve these residual concerns.
The CMA has now opened a session, till 6 October, on Microsoft’s proposed cures.
Colin Raftery, senior director of mergers and Phase 1 resolution maker, mentioned:
“This is a new and substantially different deal, which keeps the cloud distribution of these important games in the hands of a strong independent supplier, Ubisoft, rather than under the control of Microsoft.”
“With additional protections to make sure that the deal is properly implemented, this will maintain the structure of the market, enabling open competition to continue to shape the development of cloud gaming in the years to come, and giving UK gamers the opportunity to access Activision’s games in many different ways, including through cloud-based multigame subscription services.”
Sarah Cardell, CEO of the CMA, mentioned:
“The CMA’s place has been constant all through – this merger might solely go forward if competitors, innovation, and selection in cloud gaming was preserved. In response to our authentic prohibition, Microsoft has now considerably restructured the deal, taking the mandatory steps to deal with our authentic concerns.
“It would have been far better, though, if Microsoft had put forward this restructure during our original investigation. This case illustrates the costs, uncertainty and delay that parties can incur if a credible and effective remedy option exists but is not put on the table at the right time.”
More info on the restructured transaction, the brand new Phase 1 investigation and learn how to submit feedback is out there on the Microsoft / Activision Blizzard (ex-cloud streaming rights) merger inquiry.
Notes to Editors
- Microsoft is proposing to buy Activision, excluding cloud gaming rights for current and future Activision PC and console video games launched over the following 15 years (excluding in the European Economic Area).
- Following the prohibition of the unique deal, Microsoft additionally requires permission from the CMA to purchase any a part of Activision, so the CMA has additionally launched a separate session to tell its resolution on whether or not to grant Microsoft permission to purchase Activision. Both consultations will stay open till Friday, 6 October.
- The full timeline of the CMA’s investigation into the unique transaction (Phase 1 and 2) is out there right here: Microsoft / Activision Blizzard merger inquiry – GOV.UK (www.gov.uk)
- All media enquiries needs to be directed to the CMA press workplace by e mail on press@cma.gov.uk, or by telephone on 020 3738 6460.
