REG - Competition and Mkts - Merger Update: Microsoft / Activision

Activision BlizzardAnnouncement

13/10/2023 08:15

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RNS Number : 0565Q  Competition and Markets Authority  13 October 2023

Microsoft concession a gamechanger that will promote competition

 * Deal to buy Activision without cloud gaming rights cleared by CMA

 * Ubisoft acquiring rights instead of Microsoft addresses CMA concerns

 * CMA holding firm preserves competitive prices and better services in cloud
gaming

The new deal for Microsoft to buy Activision without cloud gaming rights has
been cleared after the CMA concluded it would preserve competitive prices and
better services.

In August this year Microsoft made a concession that would see Ubisoft,
instead of Microsoft, buy Activision's cloud gaming rights. This new deal will
put the cloud streaming rights (outside the EEA) for all of Activision's PC
and console content produced over the next 15 years in the hands of a strong
and independent competitor with ambitious plans to offer new ways of accessing
that content.

As a result of this concession, the CMA agreed to look afresh at the deal and
launched a new investigation in August. That investigation has completed today
with the CMA clearing this narrower transaction.

The new deal will stop Microsoft from locking up competition in cloud gaming
as this market takes off, preserving competitive prices and services for UK
cloud gaming customers. It will allow Ubisoft to offer Activision's content
under any business model, including through multigame subscription services.
It will also help to ensure that cloud gaming providers will be able to use
non-Windows operating systems for Activision content, reducing costs and
increasing efficiency.

Sarah Cardell, Chief Executive of the CMA said:

"The CMA is resolute in its determination to prevent mergers that harm
competition and deliver bad outcomes for consumers and businesses. We take
our decisions free from political influence and we won't be swayed by
corporate lobbying.

"We delivered a clear message to Microsoft that the deal would be blocked
unless they comprehensively addressed our concerns and stuck to our guns on
that.

"With the sale of Activision's cloud streaming rights to Ubisoft, we've made
sure Microsoft can't have a stranglehold over this important and rapidly
developing market. As cloud gaming grows, this intervention will ensure people
get more competitive prices, better services and more choice. We are the only
competition agency globally to have delivered this outcome.

"But businesses and their advisors should be in no doubt that the tactics
employed by Microsoft are no way to engage with the CMA. Microsoft had the
chance to restructure during our initial investigation but instead continued
to insist on a package of measures that we told them simply wouldn't work.
Dragging out proceedings in this way only wastes time and money."

Martin Coleman, Chair of the Independent Panel who reviewed the original
Microsoft deal, said:

"Cloud gaming is an important new way for gamers to access games and this deal
could have seriously undermined its potential development. On that we, the
European Commission and the US Federal Trade Commission are in full agreement.
Where we differ is on how we solve that problem. We rejected a solution put to
us by the parties which would have left Microsoft with too much control.

 

"We now have a new transaction in which the cloud distribution of Activision
games, old and new, is taken away from Microsoft and put into the hands of
Ubisoft, an independent party who is committed to widening access to the
games. That's better for competition, better for consumers and better for
economic growth."

 

The decision

In its original investigation, the CMA found Microsoft already held a strong
position in relation to cloud gaming and blocked the deal.

The sale of Activision's cloud streaming rights to Ubisoft will prevent the
distribution of important, popular content – including games such as Call of
Duty, Overwatch, and World of Warcraft – from coming under the control of
Microsoft in relation to cloud gaming. The restructured deal substantially
addressed the concerns that the CMA had following its original investigation,
which concluded earlier this year.

The CMA did identify limited residual concerns with the new deal, but
Microsoft gave undertakings that will ensure that the terms of the sale of
Activision's rights to Ubisoft are enforceable by the CMA.

The CMA consulted on these undertakings and is satisfied that this will
provide the safety net needed to make sure this deal is properly implemented.

For more information, visit the Microsoft / Activision (ex-cloud streaming
rights) case page
(https://www.gov.uk/cma-cases/microsoft-slash-activision-blizzard-ex-cloud-streaming-rights-merger-inquiry)
.

Notes to editors:

1.   The full timeline of the CMA's investigation into the original
transaction (Phase 1 and 2) is available
(https://www.gov.uk/cma-cases/microsoft-slash-activision-blizzard-merger-inquiry)
.

2.   All media enquiries should be directed to the CMA press office by email
on press@cma.gov.uk (mailto:press@cma.gov.uk) , or by phone on 020 3738 6460.

 

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