The Competition and Markets Authority has opened a new phase 1 investigation into a new, restructured deal by Microsoft to buy Activision.
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The new deal follows confirmation by the Competition and Markets Authority (CMA) that the original deal would be blocked to protect innovation and choice in cloud gaming.
In an unusual step, Microsoft had sought to revisit the CMA’s original prohibition decision, arguing that blocking the original deal was no longer appropriate in light of developments since the CMA issued its Final Report in April, including the acceptance of binding commitments by the European Commission and a licensing deal agreed between Sony and Microsoft.
The independent group which took the original decision reviewed these submissions and decided that they did not provide any basis for a change to the original prohibition decision.
To give final legal effect to that decision, the CMA has today imposed a Final Order which prohibits the original deal on a worldwide basis.
Separately, Microsoft and Activision have agreed a new, restructured deal, which has been submitted to the CMA to review in a new investigation.
This new investigation will be carried out in line with the CMA’s usual Phase 1 processes and the statutory deadline for a decision is 18 October 2023.
Under the restructured deal, Microsoft will not acquire cloud rights for existing Activision PC and console games, or for new games released by Activision during the next 15 years (this excludes the European Economic Area).
Instead, these rights will be divested to Ubisoft Entertainment SA (Ubisoft) prior to Microsoft’s acquisition of Activision.
Microsoft has stated that the restructured deal is intended to address the concerns set out in the CMA’s Final Report in April.
In particular, the transaction is intended to provide an independent third-party content supplier, Ubisoft, 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’s content under different business models, including subscription services. The deal also proposes that Ubisoft would have the ability to require Microsoft to provide versions of games on operating systems other than Windows. ■