Microsoft’s Savvy Concession Unlocks Merger, Boosts Competition

In August 2023, Microsoft made a strategic concession, enabling Ubisoft to purchase Activision’s cloud streaming rights for all PC and console content produced over the next 15 years outside the EEA. This move places the rights in the hands of Ubisoft, a robust and independent competitor with ambitious plans to innovate new methods of content access.

Ensuring Fair Competition

The CMA has been steadfast in its commitment to preventing mergers that could potentially harm competition and yield unfavorable outcomes for consumers and businesses. Sarah Cardell, Chief Executive of the CMA, emphasized,

“We delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns.”

The sale of Activision’s cloud streaming rights to Ubisoft is a strategic move to prevent Microsoft from monopolizing the burgeoning cloud gaming market. This intervention is designed to safeguard competitive pricing, enhance services, and broaden choices for UK cloud gaming customers. Furthermore, it will empower Ubisoft to offer Activision’s content under various business models, including through multi-game subscription services, and ensure that cloud gaming providers can utilize non-Windows operating systems for Activision content, thereby reducing costs and boosting efficiency.

A Resolute Stance Against Anti-Competitive Practices:

Cardell also highlighted the CMA’s unwavering stance against corporate lobbying and its dedication to decisions free from political influence. The CMA has been resolute in ensuring that Microsoft does not exert excessive control over this pivotal and rapidly developing market.

“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,”

Cardell added.

A Win for Consumers and Economic Growth

Martin Coleman, Chair of the Independent Panel reviewing the original Microsoft deal, shared that the new transaction, which diverts the cloud distribution of Activision games to Ubisoft, is a positive development for competition, consumers, and economic growth. The deal prevents the distribution of significant, popular content – including blockbuster games like Call of Duty, Overwatch, and World of Warcraft – from being controlled by Microsoft in the realm of cloud gaming.

Conclusion

The CMA’s decision to clear this narrower transaction comes after its original investigation found Microsoft to already possess a strong position in relation to cloud gaming, prompting the deal to be blocked. The restructured deal, which saw the sale of Activision’s cloud streaming rights to Ubisoft, substantially addressed the concerns that the CMA had following its original investigation, which concluded earlier this year. While the CMA identified limited residual concerns with the new deal, Microsoft provided undertakings that will ensure the terms of the sale of Activision’s rights to Ubisoft are enforceable by the CMA.

This development marks a significant milestone in the cloud gaming industry, ensuring that as the market continues to grow, consumers will benefit from more competitive prices, better services, and increased choice.

Image: Analytics India Mag