Cloud Streaming Rights Sold to Ubisoft
Microsoft (MS) is giving up some cloud streaming rights to acquire the U.S. game company Activision Blizzard in what is called a 'tech mega deal.' This is a revised proposal to overcome monopoly concerns raised by the UK competition authority, which had previously rejected the acquisition approval. The authority has also unusually decided to conduct a reassessment.
According to MS, Brad Smith, Vice Chairman, announced on the 22nd (local time) through an official blog that they presented a revised proposal, including selling cloud streaming rights for countries outside the European Economic Area (EEA) to competitor Ubisoft. By transferring the rights to service Activision Blizzard's console and PC games in cloud streaming form to the French game developer, it ensures that users without MS devices can also play the games.
This includes all current Activision Blizzard games as well as those released over the next 15 years. Activision Blizzard is a developer owning popular games such as Call of Duty, Candy Crush, and World of Warcraft. Vice Chairman Smith explained, "We have adjusted the acquisition agreement to address concerns raised by the UK Competition and Markets Authority (CMA)" and added, "We presented this to the CMA today." He further stated, "We believe this progress is positive for players, the development of the cloud game streaming market, and the growth of our industry." MS did not disclose the amount related to the sale of cloud streaming rights.
In response, CMA Chair Sarah Cardell said, "This is significantly different from what was previously proposed," but added, "This does not mean we are giving a green light. We will carefully and objectively evaluate the revised details, including third-party opinions and the impact on competition." The CMA plans to release the results of the first-stage review by October 18, which coincides with the extended merger deadline for MS and Activision Blizzard.
Earlier, MS announced in early last year that it would acquire Blizzard for about $69 billion based on the stock price at the time. This was expected to be the largest tech acquisition at the time and a 'deal of the century.' MS's plan was to become the world's third-largest game company after Tencent and Sony through this acquisition. However, the CMA opposed MS's merger at the end of April, citing concerns that it would hinder innovation in the cloud gaming market and reduce user choice. For MS's acquisition of Activision Blizzard to be completed, it must pass reviews by 16 competition authorities, including those in the U.S., European Union (EU), and China. While the EU, China, Brazil, and Japan have approved the acquisition, the U.S. and UK have expressed strong concerns that it would harm market competition.
This trend changed in July. After a U.S. court dismissed the Federal Trade Commission's (FTC) injunction request to stop MS's acquisition of Blizzard, the CMA also shifted its stance. The CMA stated it would reconsider if MS changed the contract structure to address concerns about reduced competition. This was widely regarded locally as an unusual move.
Major foreign media outlets are evaluating that MS's revised proposal, which mainly involves relinquishing cloud streaming service rights pointed out by the CMA, is close to final approval. Alex Hefner, a partner at UK law firm Fladgate, told the Associated Press, "It will be another lengthy review," but added, "Realistically, it is hard to believe MS would have started a new process without high confidence of approval from the CMA."
The Wall Street Journal (WSJ) highlighted, "MS's concession (revised proposal) is significant for MS, which has spent over a year and a half striving for acquisition approval from global competition authorities." The New York Times (NYT) reported, "It now appears that MS's acquisition of Activision Blizzard is on the path to approval," adding, "The UK is the last resistance blocking the completion of this blockbuster deal."
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