Microsoft submits new Activision Blizzard takeover deal to British regulator after initial block

Cloud gaming is seen as the next frontier in the industry, offering subscription services that allow people to stream games just as they would movies or shows on Netflix. It could even remove the need for expensive consoles, with users playing the games on PCs, mobile and TVs instead.

Regulators previously argued that Microsoft could also take key Activision games like Call of Duty, and make them exclusive to Xbox and other Microsoft platforms.

Authorities in the European Union were the first major regulator to clear the deal back in May. To cross that line, Microsoft offered concessions, such as offering royalty-free licenses to cloud gaming platforms to stream Activision games, if a consumer has purchased them.

The CMA refused similar measures at the time, which it felt would allow Microsoft to “set the terms and conditions for this market for the next ten years.”

In the U.S., the Federal Trade Commission was fighting a legal battle with Microsoft in an effort to get the Activision takeover scrapped. In July, however, a judge blocked the FTC’s attempt to do so, clearing the way for the deal to go ahead in the U.S.

Just hours later, the CMA said it was “ready to consider any proposals from Microsoft to restructure the transaction” and allay the regulator’s concerns.

The restructured deal and cloud rights divestment to Ubisoft are intended to provide an independent third-party content supplier with the ability to supply Activision’s gaming content to all cloud gaming service providers, including to Microsoft itself.

Ubisoft will be able to license out Activision content under different business models, including subscription services.

The deal would also require Microsoft to provide versions of games on operating systems other than Windows, which it owns.

“Microsoft has notified a new and restructured deal, which is substantially different from what was put on the table previously,” Sarah Cardell, CEO of the CMA, said in a statement.

“As part of this new deal, Activision’s cloud streaming rights outside of the EEA (European Economic Area) 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.”

Cardell emphasised this is not a signal of an approval for the deal.

“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.”

For its part, Microsoft will be compensated for its divestment to Ubisoft “through a one-off payment and through a market-based wholesale pricing mechanism, including an option that supports pricing based on usage. It will also give Ubisoft the opportunity to offer Activision Blizzard’s games to cloud gaming services running non-Windows operating systems,” Smith said Tuesday.