Microsoft wants Activision so badly, it's handing streaming rights over to ... Ubisoft?
(2023/08/22)
- Reference: 1692703073
- News link: https://www.theregister.co.uk/2023/08/22/microsoft_activision_ubisoft_cma/
- Source link:
Microsoft so desperately wants its $68.7 billion takeover of Activision Blizzard to happen that it's willing to divest cloud streaming rights for the publisher's games to France's Ubisoft.
The [1]largest acquisition in tech history first surfaced in January 2022, but regulators were quick to tap the brakes over concerns that Microsoft, with its already well-developed credentials in cloud gaming, would have the market cornered if the deal went ahead as presented.
Not just that, but the star power of Activision's Call of Duty also worried gamers and regulators alike that Microsoft would make the shooter series exclusive to Xbox and Windows.
[2]
Cue investigations popping up both sides of the Atlantic and [3]a number of concessions from Microsoft to make the takeover more palatable to competition watchdogs – not least [4]an agreement with Sony to keep Call of Duty on the PlayStation for at least the next 10 years.
[5]
[6]
The European Union was the [7]first to be swayed , conceding in May that "the Commission's in-depth market investigation indicated that Microsoft would not be able to harm rival consoles and rival multi-game subscription services."
But the US and UK proved considerably harder to please. In America, the Federal Trade Commission (FTC) went so far as to slap a [8]restraining order on the deal, lest the parties finalized the merger before it could decide whether to allow it. However, a federal judge later [9]shot this down , apparently satisfied with Microsoft's litany of compromises, arguing that the FTC hadn't provided evidence that Microsoft would restrict access to Activision software by platform.
[10]
Which left the UK's Competition and Markets Authority (CMA) as the last major hurdle to the deal and the most stubborn of all. Though the watchdog admitted the Sony agreement [11]could soften its stance , the CMA's concerns have mainly focused on Microsoft's "powerful position and head start over other competitors in cloud gaming."
"Gaming is the UK's largest entertainment sector," the CMA's Martin Coleman said when the merger was blocked in April, which Microsoft [12]appealed against . "Cloud gaming is growing fast with the potential to change gaming by altering the way games are played, freeing people from the need to rely on expensive consoles and gaming PCs and giving them more choice over how and where they play games. This means that it is vital that we protect competition in this emerging and exciting market."
So "keep talking," basically.
[13]
And Microsoft kept talking, today presenting a revised deal where Ubisoft – home of Assassin's Creed , Far Cry , and more – would be sold the exclusive worldwide rights to stream Activision titles and non-exclusive rights for the European Economic Area over the next 15 years.
Microsoft vice chair and president Brad Smith [14]said yesterday : "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. This includes executing an agreement effective at the closing of our merger that transfers the cloud streaming rights for all current and new Activision Blizzard PC and console games released over the next 15 years to Ubisoft Entertainment SA, a leading global game publisher. The rights will be in perpetuity.
"As a result of the agreement with Ubisoft, Microsoft believes its proposed acquisition of Activision Blizzard presents a substantially different transaction under UK law than the transaction Microsoft submitted for the CMA's consideration in 2022. As such, Microsoft today has notified the restructured transaction to the CMA and anticipates that the CMA review processes can be completed before the 90-day extension in its acquisition agreement with Activision Blizzard expires on October 18."
[15]UK watchdog reopens consultation on Microsoft's bid for Activision Blizzard
[16]Microsoft promises to keep Call of Duty on PlayStation for next decade. Sony believes it
[17]Judge shoots down FTC attempt to stall Microsoft-Activision merger
[18]FTC pulls emergency brake on Microsoft's marriage to Activision Blizzard
The CMA, which now has to launch another probe of the restructured deal, [19]explained further : "The terms of the transaction will allow Ubisoft to commercialise these rights to other cloud gaming services providers (including to Microsoft itself). Ubisoft will compensate Microsoft for the cloud streaming rights to Activision's games through a one-off payment and through a market-based wholesale pricing mechanism, including an option that supports pricing based on usage.
"Ubisoft will have the right to license out the cloud streaming rights to Activision's games under any business model of its choosing, including buy-to-play, multigame subscription services, or any other model that may arise. Ubisoft will also be able, for a fee, to require Microsoft to adapt Activision's titles to operating systems other than Windows, such as Linux, if it decides to use or license out the cloud streaming rights to Activision's titles to a cloud gaming service that runs a non-Windows operating system."
Meanwhile, Ubisoft senior veep Chris Early [20]commented [PDF]: "We're dedicated to delivering amazing experiences to our players wherever they choose to play. Over the past 15 years we've built and honed our online services and distribution ecosystem into one of the most complete in the industry. Today's deal will give players even more opportunities to access and enjoy some of the biggest brands in gaming."
Looking at the proposals, Alex Haffner, competition partner at UK law firm Fladgate, said: "This latest development is perhaps not quite what many had expected when the CMA agreed a pause in Microsoft/Activision's appeal of the CMA's decision to block the transaction.
"Rather than use Microsoft's new offer of a divestment of cloud gaming rights to a competitor to clear the original deal, the CMA has instead rubber stamped that original decision and opened a new investigation into the deal in its revised form.
"Theoretically this leaves the merging parties open to the prospect of another lengthy drawn out process to deal with competition concerns raised. In reality, however, it is hard to believe Microsoft would have taken this new course without a high degree of confidence it will now in due course (finally) get a regulatory green light from the CMA."
This is likely not the deal Microsoft expected or even wanted, but shows how far the software behemoth is willing to go to make the Activision takeover happen. The CMA is now accepting comments on the new terms until September 1, while Microsoft's Smith breathes down their necks about that October 18 deadline. ®
Get our [21]Tech Resources
[1] https://www.theregister.com/2022/01/18/microsoft_buys_activision_blizzard/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZOTboxJCarbLiPg-ukv9OgAAAhc&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://www.theregister.com/2023/02/26/microsoft_nvidia_nintendo_activision/
[4] https://www.theregister.com/2023/07/17/microsoft_sony_cod/
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZOTboxJCarbLiPg-ukv9OgAAAhc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZOTboxJCarbLiPg-ukv9OgAAAhc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2023/05/15/eu_approves_microsoft_activision/
[8] https://www.theregister.com/2023/06/13/ftc_microsoft_activision_bar/
[9] https://www.theregister.com/2023/07/11/ftc_microsoft_activision/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZOTboxJCarbLiPg-ukv9OgAAAhc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2023/08/02/uk_cma_microsoft_activision/
[12] https://www.theregister.com/2023/05/25/microsoft_files_appeal_against_uk/
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZOTboxJCarbLiPg-ukv9OgAAAhc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://blogs.microsoft.com/on-the-issues/2023/08/21/microsoft-activision-restructure-acquisition/
[15] https://www.theregister.com/2023/08/02/uk_cma_microsoft_activision/
[16] https://www.theregister.com/2023/07/17/microsoft_sony_cod/
[17] https://www.theregister.com/2023/07/11/ftc_microsoft_activision/
[18] https://www.theregister.com/2023/06/13/ftc_microsoft_activision_bar/
[19] https://www.gov.uk/cma-cases/microsoft-slash-activision-blizzard-ex-cloud-streaming-rights-merger-inquiry
[20] https://staticctf.akamaized.net/8aefmxkxpxwl/3rvztTxwZhXae2dZ0PAYrd/62b6d54993322c337af9286569f19e5f/Ubisoft_Streaming_Announce_Press_Release_EN.pdf
[21] https://whitepapers.theregister.com/
The [1]largest acquisition in tech history first surfaced in January 2022, but regulators were quick to tap the brakes over concerns that Microsoft, with its already well-developed credentials in cloud gaming, would have the market cornered if the deal went ahead as presented.
Not just that, but the star power of Activision's Call of Duty also worried gamers and regulators alike that Microsoft would make the shooter series exclusive to Xbox and Windows.
[2]
Cue investigations popping up both sides of the Atlantic and [3]a number of concessions from Microsoft to make the takeover more palatable to competition watchdogs – not least [4]an agreement with Sony to keep Call of Duty on the PlayStation for at least the next 10 years.
[5]
[6]
The European Union was the [7]first to be swayed , conceding in May that "the Commission's in-depth market investigation indicated that Microsoft would not be able to harm rival consoles and rival multi-game subscription services."
But the US and UK proved considerably harder to please. In America, the Federal Trade Commission (FTC) went so far as to slap a [8]restraining order on the deal, lest the parties finalized the merger before it could decide whether to allow it. However, a federal judge later [9]shot this down , apparently satisfied with Microsoft's litany of compromises, arguing that the FTC hadn't provided evidence that Microsoft would restrict access to Activision software by platform.
[10]
Which left the UK's Competition and Markets Authority (CMA) as the last major hurdle to the deal and the most stubborn of all. Though the watchdog admitted the Sony agreement [11]could soften its stance , the CMA's concerns have mainly focused on Microsoft's "powerful position and head start over other competitors in cloud gaming."
"Gaming is the UK's largest entertainment sector," the CMA's Martin Coleman said when the merger was blocked in April, which Microsoft [12]appealed against . "Cloud gaming is growing fast with the potential to change gaming by altering the way games are played, freeing people from the need to rely on expensive consoles and gaming PCs and giving them more choice over how and where they play games. This means that it is vital that we protect competition in this emerging and exciting market."
So "keep talking," basically.
[13]
And Microsoft kept talking, today presenting a revised deal where Ubisoft – home of Assassin's Creed , Far Cry , and more – would be sold the exclusive worldwide rights to stream Activision titles and non-exclusive rights for the European Economic Area over the next 15 years.
Microsoft vice chair and president Brad Smith [14]said yesterday : "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. This includes executing an agreement effective at the closing of our merger that transfers the cloud streaming rights for all current and new Activision Blizzard PC and console games released over the next 15 years to Ubisoft Entertainment SA, a leading global game publisher. The rights will be in perpetuity.
"As a result of the agreement with Ubisoft, Microsoft believes its proposed acquisition of Activision Blizzard presents a substantially different transaction under UK law than the transaction Microsoft submitted for the CMA's consideration in 2022. As such, Microsoft today has notified the restructured transaction to the CMA and anticipates that the CMA review processes can be completed before the 90-day extension in its acquisition agreement with Activision Blizzard expires on October 18."
[15]UK watchdog reopens consultation on Microsoft's bid for Activision Blizzard
[16]Microsoft promises to keep Call of Duty on PlayStation for next decade. Sony believes it
[17]Judge shoots down FTC attempt to stall Microsoft-Activision merger
[18]FTC pulls emergency brake on Microsoft's marriage to Activision Blizzard
The CMA, which now has to launch another probe of the restructured deal, [19]explained further : "The terms of the transaction will allow Ubisoft to commercialise these rights to other cloud gaming services providers (including to Microsoft itself). Ubisoft will compensate Microsoft for the cloud streaming rights to Activision's games through a one-off payment and through a market-based wholesale pricing mechanism, including an option that supports pricing based on usage.
"Ubisoft will have the right to license out the cloud streaming rights to Activision's games under any business model of its choosing, including buy-to-play, multigame subscription services, or any other model that may arise. Ubisoft will also be able, for a fee, to require Microsoft to adapt Activision's titles to operating systems other than Windows, such as Linux, if it decides to use or license out the cloud streaming rights to Activision's titles to a cloud gaming service that runs a non-Windows operating system."
Meanwhile, Ubisoft senior veep Chris Early [20]commented [PDF]: "We're dedicated to delivering amazing experiences to our players wherever they choose to play. Over the past 15 years we've built and honed our online services and distribution ecosystem into one of the most complete in the industry. Today's deal will give players even more opportunities to access and enjoy some of the biggest brands in gaming."
Looking at the proposals, Alex Haffner, competition partner at UK law firm Fladgate, said: "This latest development is perhaps not quite what many had expected when the CMA agreed a pause in Microsoft/Activision's appeal of the CMA's decision to block the transaction.
"Rather than use Microsoft's new offer of a divestment of cloud gaming rights to a competitor to clear the original deal, the CMA has instead rubber stamped that original decision and opened a new investigation into the deal in its revised form.
"Theoretically this leaves the merging parties open to the prospect of another lengthy drawn out process to deal with competition concerns raised. In reality, however, it is hard to believe Microsoft would have taken this new course without a high degree of confidence it will now in due course (finally) get a regulatory green light from the CMA."
This is likely not the deal Microsoft expected or even wanted, but shows how far the software behemoth is willing to go to make the Activision takeover happen. The CMA is now accepting comments on the new terms until September 1, while Microsoft's Smith breathes down their necks about that October 18 deadline. ®
Get our [21]Tech Resources
[1] https://www.theregister.com/2022/01/18/microsoft_buys_activision_blizzard/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZOTboxJCarbLiPg-ukv9OgAAAhc&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://www.theregister.com/2023/02/26/microsoft_nvidia_nintendo_activision/
[4] https://www.theregister.com/2023/07/17/microsoft_sony_cod/
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZOTboxJCarbLiPg-ukv9OgAAAhc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZOTboxJCarbLiPg-ukv9OgAAAhc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2023/05/15/eu_approves_microsoft_activision/
[8] https://www.theregister.com/2023/06/13/ftc_microsoft_activision_bar/
[9] https://www.theregister.com/2023/07/11/ftc_microsoft_activision/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZOTboxJCarbLiPg-ukv9OgAAAhc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2023/08/02/uk_cma_microsoft_activision/
[12] https://www.theregister.com/2023/05/25/microsoft_files_appeal_against_uk/
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZOTboxJCarbLiPg-ukv9OgAAAhc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://blogs.microsoft.com/on-the-issues/2023/08/21/microsoft-activision-restructure-acquisition/
[15] https://www.theregister.com/2023/08/02/uk_cma_microsoft_activision/
[16] https://www.theregister.com/2023/07/17/microsoft_sony_cod/
[17] https://www.theregister.com/2023/07/11/ftc_microsoft_activision/
[18] https://www.theregister.com/2023/06/13/ftc_microsoft_activision_bar/
[19] https://www.gov.uk/cma-cases/microsoft-slash-activision-blizzard-ex-cloud-streaming-rights-merger-inquiry
[20] https://staticctf.akamaized.net/8aefmxkxpxwl/3rvztTxwZhXae2dZ0PAYrd/62b6d54993322c337af9286569f19e5f/Ubisoft_Streaming_Announce_Press_Release_EN.pdf
[21] https://whitepapers.theregister.com/
Re: Here's A Deal
MJI
I would prefer them to give up Arkane and Bethesda
Re: Here's A Deal
wolfetone
I can see why, but to me Rare were at their best working with Nintendo. Ever since they have been part of Microsoft they've suffered.
"Rare were at their best working with Nintendo"
Jedit
Rare were at their best when they were making Knight Lore and you will not convince me otherwise.
Re: "Rare were at their best working with Nintendo"
wolfetone
Conker's Bad Fur Day > Knight Lore.
Fact.
Re: "Rare were at their best working with Nintendo"
Dan 55
Technically at their best, since their following 3D games were progressively more meh whereas 3D games made by others were better.
But their most playable games were those similar to their [1]arcade roots . And they probably knew it since went back to arcade games in the NES/SNES era.
[1] https://wosland.podgamer.com/the-secret-history-of-ultimate/
Re: Here's A Deal
Excellentsword
And Sea of Thieves wouldn't have to rely on Azure servers...
Just looked it up
MJI
Arkane have lost a lot of high up staff.
I hope they form a new games company and produce Dishonoured quality games for multiplatform.
From 1 would-be monopoly to the next... capitalism.
badflorist
I think the CMA should hold out for...
Gunboat Diplomat
A Morrowind remaster
Re: I think the CMA should hold out for...
Brewster's Angle Grinder
And a sequel to Prey?
Wolfclaw
Interesting bit that caught my eye, Microsoft have to pay to port to Linux? Maybe Activision have their eyes on a small hand held or desktop combo Linux gaming system? if so, maybe Microsoft just handed Linux its desktop day !
@Wolfclaw
Steve Foster
You have it back to front. MS can be forced to port, but Ubisoft have to pick up the tab for that.
Virtue signalling
elsergiovolador
UK watchdog is trying hard to appear relevant while largely doing nothing.
Where is action in areas that actually harm UK business?
Re: Virtue signalling
Dan 55
I thought Stadia proved game streaming doesn't work in the UK anyway for whatever reason (ISPs and Google just blamed each other).
Re: Virtue signalling
Dave@Home
This was covered pretty well by Paul Thurrott recently - rather than look for actual consumer harm, the CMA seem to be assuming harm first and asking them to prove a negative.
Here's A Deal
Microsoft - spin off Rare in to it's own company along with the rights it holds to Goldeneye, Banjo Kazooie, Conker's Bad Fur Day.
Do that, then you can have Activision.