Microsoft transfers Activision Blizzard streaming rights to Ubisoft to appease UK regulators

Microsoft has agreed to give Ubisoft the cloud streaming rights to Call of Duty and all other Activision Blizzard titles releasing over the next 15 years in a bid to push its $68.7 billion merger through in the UK.

The Xbox maker hopes the agreement will help address the concerns of UK regulator the Competition and Markets Authority (CMA), which blocked the company's original merger proposal over fears it would allow the company to dominate the nascent cloud gaming market.

"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," wrote Microsoft in a blog post.

"Under the restructured transaction, Microsoft will not be in a position either to release Activision Blizzard games exclusively on its own cloud streaming service—Xbox Cloud Gaming—or to exclusively control the licensing terms of Activision Blizzard games for rival services."

Microsoft added that the agreement will provide Ubisoft with a "unique opportunity to commercialize the distribution of games via cloud streaming," and said the French publisher will be allowed to "innovate and encourage [the use of] different business models in the licensing and pricing of these games."

Microsoft says Ubisoft deal is "positive for players"

Notably. Microsoft's obligations to provide cloud streaming rights in the European Economic Area remain in place, allowing the company to comply with its commitments to the European Commission. It will also honor its existing contractual obligations to other cloud streaming providers such as Nvidia, Boosteroid, Nware, and Ubitus.

"We believe that this development is positive for players, the progression of the cloud game streaming market, and for the growth of our industry," said the company. "And as we continue to navigate the review process with the CMA, we remain as committed as ever to bringing the incredible benefits of the acquisition to players, developers, and the industry. Today’s development brings us one step closer to bringing the joy of gaming to players everywhere."

In a separate statement, Ubisoft said the agreement will "provide more choice for players" and further strengthen its own content offering.

"Ubisoft’s expertise in developing online services and distribution along with its relationships with streaming providers will continue to provide more choice for players to engage in the games they love from both Ubisoft and Activision Blizzard," wrote the company.

"Ubisoft+ will be able to further expand its growing library of titles enabling players the ability to play across multiple platforms including PC, Xbox consoles and Amazon Luna with a single subscription to Ubisoft+ Multi Access, and on the PlayStation platform with Ubisoft+ Classics."

The CMA launches investigation into restructured deal

Reacting to the news and Microsoft's new proposal, the CMA finalized its decision to block the original merger and will begin reviewing the restructured deal by opening a new Phase 1 investigation. 

The new investigation will be carried out in line with the CMA's standard Phase 1 processes and is expected to conclude by October 18, 2023.

"The CMA has today confirmed that Microsoft’s acquisition of Activision, as originally proposed, cannot proceed," said CMA chief executive Sarah Cardell. "Separately, Microsoft has notified a new and restructured deal, which is substantially different from what was put on the table previously. 

"As part of this new deal, Activision’s cloud streaming rights outside of the EEA 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. We will now consider this deal under a new Phase 1 investigation."

Cardell reiterated that a new investigation doesn't guarantee a "green light," and said the regulator will carefully and objectively assess the details of the restructured deal and its impact on competition.

"Our goal has not changed–any future decision on this new deal will ensure that the growing cloud gaming market continues to benefit from open and effective competition driving innovation and choice," she added.

Commenting on the move, Activision Blizzard CEO Bobby Kotick said the company welcomes the Ubisoft deal  will continue to work closely with both Microsoft and the CMA throughout the remaining review process.