Tag Archives: CMA

Microsoft To Sell Off Activision Cloud Gaming Rights To Ubisoft

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Microsoft is restructuring its proposed Activision Blizzard deal to transfer cloud gaming rights for current and new Activision Blizzard games to Ubisoft. The transfer of rights is designed to appease regulators in the UK that are concerned about the impact Microsoft’s $68.7 billion deal will have cloud gaming competition. The restructured deal has triggered a new regulatory investigation in the UK that could last until October 18th, The Verge reported.

“To address the concerns about the impact of the proposed acquisition on cloud game streaming raised by the UK Competition and Markets on cloud game streaming raised by the UK Competition and Markets Authority, we are restructuring the transaction to acquire a narrower set of rights,” says Microsoft president Brad Smith. “This includes executing an agreement effective at the closing of our merger that transfers the 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.”

This restructured deal means that if Microsoft does close its proposed acquisition, then it will not be able to release Activision Blizzard games exclusively control the licensing terms of Activision Blizzard games on rival services. Instead, Ubisoft will control the streaming rights to Activision Blizzard games outside of the EU and license titles back to Microsoft to be included in Xbox Cloud Gaming.

According to The Verge, Ubisoft will also add Actvision Blizzard games to its Ubisoft Plus Multi Access subscription, which is available across PC, Xbox, Amazon Luna, and on PlayStation via Ubisoft Plus Classics.

The GOV.UK website posted a press release titled: “Microsoft submits new deal for review after CMA confirms original deal is blocked.” From the press release:

CMA finalizes decision to block original merger after rejecting submissions by Microsoft to revisit its original decision;

Microsoft submits new, restructured deal for review, triggering a fresh Phase 1 investigation by CMA;

Under the new deal, Microsoft will not acquire the cloud streaming rights to all current and future Activision games released during the next 15 years (excluding in the EEA).

Here is a key part of the press release:

…Microsoft has stated that the restructured deal is intended to address the concerns set out in the CMA’s Final Report in April. In particular, the transaction is intended to provide an independent third-party content supplier, Ubisoft, with the ability to supply Activision’s gaming content to all cloud gaming service providers (including to Microsoft itself). Ubisoft will be able to license out Activision’s content under different business models, including subscription services. The deal also proposes that Ubisoft would have the ability to require Microsoft to provide versions of games on operating systems other than Windows…

It seems to me that this paragraph implies that Ubisoft will have the ability to require Microsoft to actually put versions of Activision Blizzard’s games on “operating systems other than Windows.” I’m hoping that means that players who use a Mac will finally get access to more games!

Microsoft And Activision Agree To Extend $69 Billion Deal Deadline

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Microsoft and Activision Blizzard on Wednesday agreed to extend the deadline for their merger agreement until Oct. 18, Activision said in a statement Wednesday, CNBC reported. The two companies had originally agreed to complete the transaction by July 18, but regulatory pushback from the U.S. and U.K. delayed the takeover.

According to CNBC, if Microsoft had not extended the deal deadline, the company could have been on the hook for a $3 billion breakup fee to Activision Blizzard. By extending the period for the companies to close their transaction, Microsoft and Activision are giving themselves more time to satisfy regulators’ concerns and to get it over the line.

A new agreement between Microsoft and Activision, struck on July 18, included a provision to bump up the termination fee by increments at certain periods, if the merger is not cleared by the new deadline.

CNBC also reported that by August 29, the breakup fee will be increased to $3.5 billion of the transaction is terminated by the parties, while by September 15, the potential breakup fee will rise to $4.5 billion.

Activision Blizzard posted the following press release on BusinessWire. From the press release:

“This quarter, our talented teams delivered strong performance for our players and shareholders. We delivered a 50% year-over-year increase in net bookings, operating income growth over 70%, earning per share growth over 80%, and a record quarter for Blizzard with over $1 billion in net bookings for the first time,” said Bobby Kotick, CEO of Activision Blizzard. “Most importantly, we continue to set new standards of excellence for workplace culture and provide joy and connection to hundreds of millions of players around the world. While we continue to have concerns about the economy and growing industry competition, we remain focused on the long-term opportunities ahead and completing our merger with Microsoft.”

Polygon reported that the CMA blocked Microsoft’s buyout of Activision Blizzard in April, arguing that the merger would lead to “reduced innovation and less choice for UK gamers over the years to come” in the burgeoning cloud gaming market.

According to Polygon, on Monday, the Xbox maker and the CMA asked a judge to stay that process – the parties are reported to have held “productive” talks on remedies that Microsoft could agree to in order to help the deal pass.

“The recent decision in the U.S. and approvals in 40 countries all validate that the deal is good for competition, players, and the future of gaming,” an Activision Blizzard spokesperson said in a statement to Polygon. “Given global regulatory approvals and the companies’ confidence that the CMP now recognizes there are remedies available to meet their concerns in the U.K., the Activision Blizzard and Microsoft boards of directors have authorized the companies not to terminate the deal until after October 18. We’re confident in our next steps and that our deal will quickly close.”

Polygon also reported that Microsoft and Activision will be hoping to close the deal well before the Oct. 18 deadline. The U.K.’s Competition Appeal Tribunal has given Microsoft and the CMA until late September to reach an agreement, while the CMA says it expects to have finalized its conclusions well in advance of its own deadline on Aug. 29.

It seems to me that the date of the acquisition has been moved up a bit, in part to allow Microsoft to appease the CMA’s concerns. Considering the huge financial penalties that Microsoft and/or Activision Blizzard would face if the merger doesn’t close by then, I expect things will work out.

CMA Narrows Scope Of Concerns In Microsoft – Activision Review

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The UK’s Competition and Markets Authority (CMA) issued updated provision. From the review:

“In February, the Competition and Markets Authority (CMA) published provisional findings setting out that the deal raises competition concerns in relation to both console gaming and cloud gaming services in the UK. The publication of the provisional findings initiated a period of consultation in which the CMA invited responses to those findings from interested parties and continued to gather further information.

“The CMA has received a significant amount of new evidence in response to its original provisional findings. Having considered this new evidence carefully, together with the wide range of information gathered before those provisional findings were issued, the CMA inquiry group has updated its provisional findings and reached the provisional conclusion that, overall, the transaction will not result in a substantial lessening of competition in relation to console gaming in the UK.

“The most significant new evidence provided to the CMA relates to Microsoft’s financial incentives to make Activision’s games, including Call of Duty (CoD), exclusive to its own consoles. While the CMA’s original analysis indicated that this strategy would be profitable under most scenarios, new data (which provides better insight into the actual purchasing behavior of CoD gamers) indicates that the strategy would be significantly loss-making under any plausible scenario. On this basis, the updated analysis now shows that it would not be commercially beneficial to Microsoft to make CoD exclusive to Xbox following the deal, but that Microsoft will instead have the incentive to continue to make the game available on PlayStation.

The CMA’s addendum to its provisional findings today relates only to competition in the supply of consoles and not to competition in the supply of cloud gaming services, where the CMA is continuing to carefully consider the responses in relation to the original provisional findings. The CMA’s merger investigation continues, and it remains due to issue its final report by 26 April 2023…

GameSpot reported that a key regulator has said it provisionally no longer believes Microsoft’s proposed deal to buy Activision Blizzard would result in a lessening of competition in the console space, paving the way for the purchase to go through.

The UK’s Competition and Markets Authority said on Friday that it has narrowed the scope of its concerns about the deal. Importantly, though, the deal is not complete, and the CMA still has concerns about Microsoft’s bid to buy Activision Blizzard in the are of cloud gaming.

A spokesperson for Activision shared a statement with GameSpot about the CMA decision:

“The CMA’s updated provisional findings show an improved understanding of the console gaming market and demonstrate a commitment to supporting players and competition. Sony’s campaign to protect its dominance by blocking our merger can’t overcome the facts, and Microsoft has already presented effective and enforceable remedies to address each the CMA’s remaining concerns. We know this deal will benefit competition, innovation, and consumers in the UK.”

TechCrunch reported that a Microsoft spokesperson sent this statement:

“We appreciate the CMA’s rigorous and thorough evaluation of the evidence and welcomes updated provisional findings. This deal will provide more players with more choice in how they play Call of Duty and their favorite games. We look forward to working with the CMA to resolve any outstanding concerns.”

TechCrunch also reported that Microsoft sent an updated statement – attributed to Brad Smith, it’s vice char and president:

“We appreciate the CMA’s additional detailed and objective analysis. Its update underscores a growing consensus by those with access to the most current data that this deal will create more competition in the console market, not less.”

Personally, I feel like this situation is dragging on and on, and would like to see it resolved. There are plenty of gamers who want to see Microsoft acquire Activision Blizzard.

UK’s CMA Rejects Microsoft’s Acquisition of Activision

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UK’s Competition and Markets Authority posted a press release titled: “Microsoft – Activision deal could harm UK gamers”. The press release starts with: A CMA investigation has provisionally concluded that Microsoft’s proposed acquisition of Activision could result in higher prices, fewer choices, or less innovation for UK gamers.

The provisional findings from the Competition and Markets Authority (CMA) follow a wide-ranging investigation conducted over the last five months to understand the market and potential impact of the deal. This has included holding site visits and hearings to hear directly from business leaders at Microsoft and Activision, analyzing over 3 million internal documents from the two businesses to understand their views on the market, commissioning an independent survey of UK gamers, and gathering evidence from a range of other gaming console providers, game publishers, and cloud gaming service providers.

Competition in the supply of cloud gaming services

The CMA provisionally found that being able to offer popular games will be important for cloud gaming providers to attract users as the market continues to grow and develop. The evidence available to the CMA currently indicates that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service (or only available on other services under materially worse conditions). Microsoft already accounts for an estimated 60-70% of global cloud gaming services and also has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).

The CMA provisionally found that buying one of the world’s most important game publishers would reinforce this strong position and substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK. This could alter the future of gaming, potentially harming UK gamers, particularly those who cannot afford or do not want to buy an expensive gaming console or gaming PC.

Competition in the supply of consoles

The CMA provisionally found that a small number of key games, including Call of Duty (CoD), Activision’s flagship game, play an important role in driving competition between consoles. The evidence available to the CMA, including data on how Microsoft measures the value of customers in the ordinary course of business, currently indicate that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own consoles (or only available on PlayStation under materially worse conditions). The CMA’s provisional findings note that this strategy, of buying gaming studios and making their content exclusive to Microsoft’s platforms, has been used by Microsoft following several previous acquisitions of games studios.

The CMA provisionally found that weakening competition by restricting the access that other platforms have to Activision’s games could substantially reduce the competition between Xbox and PlayStation in the UK, harming UK gamers.

Xbox and PlayStation compete closely with each other at present and access to the most important content like CoD, is an important part of that competition. Reducing this competition between Microsoft and Sony could result in all gamers seeing higher prices, reduced range, lower quality, and worse service in gaming consoles over time.

There is more in this press release, but I think the key points are listed above. The provisional results are clearly not in Microsoft’s favor.

CMA Plans Market Investigation Into Mobile Browsers and Cloud Gaming

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The UK’s Competition and Markets Authority (CMA) posted a press release announcing its plans for a market investigation into mobile browsers and cloud gaming. According to the CMA: Apple and Google “hold all the cards” with interventions needed to give innovators and competitors a fair chance to compete in mobile ecosystems.

More specifically, the CMA is consulting on the launch of a market investigation into Apple and Google’s market power in mobile browsers and Apple’s restrictions on cloud gaming through its App Store. In parallel, it is also taking enforcement action against Google in relation to its app store payment practices.

Previous to this press release, the CMA held a year-long study of the companies’ mobile ecosystems. The final report was published on June 10, 2022. The study found that Apple and Google have an effective duopoly on mobile ecosystems that allows them to excise a stranglehold over these markets, which include operating systems, app stores and web browsers on mobile devices.

Andrea Coscelli, Chief Executive of the CMA said:

“When it comes to how people use mobile phones, Apple and Google hold all the cards. As good as many of their services and products are, their strong grip on mobile ecosystems allows them to shut out competitors, holding back the British tech sector and limiting choice.”

“We all rely on browsers to use the internet on our phones, and the engines that make them work have a huge bearing on what we can see or do. Right now, choice in this space is severely limited and that has real world impacts – preventing innovation and reducing competition from web apps. We need to give innovative tech firms, may of which are ambitious start-ups, a fair chance to compete.”

“We have always been clear that we will maximize the use of our current tools while we await legislation for the new digital regime. Today’s announcements – alongside the 8 cases currently open against major players in the tech industry, ranging from tackling fake reviews to addressing problems in online advertising – are proof of that in action.”

The Wall Street Journal reported that the CMA also announced a traditional competition investigation – which could lead to fines – into conditions Google places on in-app payments in its mobile store. That probe is similar to one the regulator opened into Apple’s App Store last year.

According to the Wall Street Journal, Apple said that it disagrees with some of the CMA’s conclusions and that it aims to work with the British regulator “to explain how our approach promotes competition and choice, while ensuring consumers’ privacy and security are protected.” Google said that it has “reacted quickly to CMA feedback in the past” and would continue to engage with the regulator.

Once again, it appears that big companies like Apple and Google are playing a game. How much can they get away with – and still avoid facing serious consequences – from the regulators of various countries? It seems to me it would be a lot easier for those companies to just comply with various regulators than to fight them.