Huh: Microsoft To Sell Cloud Rights To Activision Games To Ubisoft To Placate The CMA

Well, this certainly isn't an outcome I would have predicted. While the saga of Microsoft's attempt to acquire Activision Blizzard has certainly taken a long and winding road, as it stands today all the regulatory hurdles have seemingly been cleared save for the UK's Competition & Markets Authority (CMA). Unlike the FTC's challenge to the deal, which objected more holistically, the CMA's comments on its concerns over the merger largely focused on how Microsoft's future titles would handle cloud/streamed-gaming.

Well, as it has with all the regulators, Microsoft appears to have listened to the concerns and then tailored changes to the merger deal to address them in a fairly minimal fashion. But I will admit I didn't anticipate that Microsoft would simply sell the cloud-streaming game rights for current and future titles to Ubisoft, of all companies.

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," Microsoft President Brad Smith wrotein an August 22 blog post. This includes executing an agreementeffectiveat the closing of our merger that transfersthe 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."

Well, that's certainly a move. Now, in addition to appearing on Microsoft's own streaming service, Game Pass, the titles would be available on Ubisoft's PC and console streaming platform, or I suppose any other platform that Ubisoft would want to negotiate streaming rights with. The restructured deal would also allow Ubisoft to compel Microsoft to make versions of its titles for non-Windows operating systems.

How exactly will this messy divestiture work? According to the Competition and Markets Authority in the UK, Ubisoft will compensate Microsoft through a one-off payment" as well as a wholesale pricing mechanism" that includes the option to pay based on usage. Ubisoft will then have the ability to license out the games to other subscription services, as well as to pay a fee to force Microsoft to port Activision Games to competing PC gaming operating systems like Linux.

Now, the CMA made sure to note that its comment does not indicate that this new version of the acquisition has been or will be approved. We're not done with this whole thing just yet.

But the writing is on the wall. While possible, I simply can't imagine a world in which every other regulatory body has approved this deal and the CMA still rejects it.