EU antitrust regulators are set to assess the impact of Microsoft’s proposal to sell its non-EU cloud streaming rights to Ubisoft Entertainment as part of its remedy for the UK Activision deal. The regulators will examine whether this proposal is enough to address competition concerns and ensure a level playing field in the market. Microsoft already has a nod from Europe in the Activision deal but the company is facing stiff hurdles in the U.K. The latest proposal by the company is to ensure that the deal in the U.K. pulls through. However, the EU will now double-check the proposal to ensure that it will not hurt its economy.
Background
Microsoft announced its intention to acquire UK – based video game company Activision Blizzard in January 2023 for $68.7 billion. The deal would give Microsoft control over popular game franchises such as Call of Duty, World of Warcraft, and Candy Crush. However, the deal raised concerns among antitrust regulators in the EU and other areas.
The EU Commission launched a probe into the deal in March 2023. The EU cited concerns that it could harm rivalry in the market for video game streaming services. The Commission was mainly concerned about the impact of the deal on the nascent cloud gaming market. In this market, Microsoft is already the major player through its Xbox Game Pass service.
However, Microsoft showed commitment by offering a 10-year licensing deal to rivals. The company also offered free licenses to users in the EU nations. This took care of the EU’s concerns about competition. These remedies have been deemed pro – competitive and have met the EU regulator’s needs. However, the company still needs a remedy to appease UK regulators.
Microsoft’s remedy proposal
To tackle the probe of the deal in the U.K., Microsoft has come up with a new remedy. The company proposes to sell its non-EU cloud streaming rights to Ubisoft, a French video game company. The proposal would allow Ubisoft to offer its games on Microsoft’s cloud gaming platform. It will also ensure that the latter does not have an unfair edge in the market.
Microsoft also committed to providing access to its cloud gaming platform to other video game brands on a non-discriminatory basis. This would ensure that other players in the market have a fair chance to compete with the company.
Selling its non-EU cloud streaming rights to Ubisoft is put forward as a way to appease UK regulators. The deal will give Ubisoft total control of the streaming rights for all of Activision’s console games. This includes popular titles such as Call of Duty and World of Warcraft, outside of the EU. This way, the deal will take a part of the cloud gaming power from Microsoft. This is what the regulators want, they do not want one company to control so much.
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Here are some key points about the proposed deal:
- Ubisoft will compensate Microsoft for the cloud streaming rights to Activision’s games. This will happen through a one-off payment and through a market-based royalty rate.
- The deal will allow Ubisoft to make Activision’s games available on its own cloud gaming platform.
- The proposed sale of non-EU cloud streaming rights is seen as a pivotal step in Microsoft’s strategy to secure approval for its deal to buy Activision.
- The UK’s Competition and Markets Authority (CMA) is currently probing the deal.
- The CMA has expressed concerns that the deal could lead to higher prices for users. They also feel it could lead to a reduction in the quality and range of video games.
- The proposed sale of non-EU cloud streaming rights to Ubisoft is expected to help address these concerns. This is by ensuring that there is still a rivalry in the market for cloud gaming services.
The proposed sale of non-EU cloud streaming rights to Ubisoft is a big move in Microsoft’s bid to acquire Activision. By addressing concerns about competition in the UK gaming market, Microsoft is hoping to secure approval for the deal. When this is done, it can then move forward with its plans to expand its presence in the gaming industry.
EU antitrust regulators’ assessment
EU antitrust regulators will now assess whether Microsoft’s proposal is enough to address competition concerns and ensure a level playing field in the market. The regulators will examine the impact of the proposal on the cloud gaming market, as well as on other related markets such as video game streaming services. The EU regulators will also check if Microsoft’s proposal to sell its non-EU cloud rights to Ubisoft will affect its initial approval for the deal.
A spokesperson for the European Union executive said in an email response to Reuters
“We are closely following the developments in the UK and assessing the impact this may have on the commitments accepted by the Commission,”
Back in May, the EU gave the deal a nod after the company offered some good terms like the 10 years licensing deal to rivals. However, they will now consider if the latest proposal by Microsoft will need the EU to revisit the deal.
Final Words
The EU antitrust regulators’ check of Microsoft’s proposal to sell its non-EU cloud streaming rights to Ubisoft is a crucial step in the review of the proposed acquisition of Activision by Microsoft. The regulators will assess the deal and whether the proposal is enough to address rivalry concerns. The main target of this check is to ensure a level playing field in the market. The outcome of the check will have a huge impact on the video game industry. In fact, it will also have an impact on the nascent cloud gaming market.
