The EU might need to reassess Microsoft ’s Activision Blizzard deal

Microsoft announced a restructuring of its proposed Activision Blizzard acquisition earlier today that involves transferring cloud gaming rights for current and new Activision Blizzard games to Ubisoft. It’s a big change in Microsoft’s $68.7 billion deal that’s designed to appease UK regulators that blocked the acquisition earlier this year, but it might also trigger a refresh review from the EU.

“The Commission is carefully assessing whether the developments in the UK require another notification to the Commission,” says European Commission spokesperson Arianna Podesta in a statement to The Verge.

Another notification to the EU could signal a further review of a deal that regulators at the European Commission cleared earlier this year. While the EU had cloud gaming concerns just like the EU, it secured remedies as part of that approval, granting EU consumers a free license to stream via “any cloud game streaming services of their choice” all current and future Activision Blizzard PC and console games that they have a license for. Cloud providers will also be offered a free license to stream these games in EU markets.

The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services. This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose. — Brad Smith (@BradSmi) May 15, 2023

At the time of that approval, Microsoft also committed, in a tweet from Microsoft president Brad Smith, that these licenses “will apply globally” and be applied “automatically to competing cloud gaming services.” While Microsoft says the restructured transaction won’t affect Microsoft’s obligations to the European Commission, Ubisoft will now control licensing outside of EU markets.

In reality, that means a cloud gaming service could start in the EU with a free license, but it would now need Ubisoft to grant it a license if it wanted to operate in the US, for example. Microsoft had been planning to apply these licenses freely globally, but it’s now surrendering Activision Blizzard cloud gaming rights to Ubisoft outside of the EU.

The restructured deal means that if Microsoft does close this proposed acquisition, then it will also need to seek a license from Ubisoft for Activision Blizzard games on its Xbox Cloud Gaming service outside of the EU. It will not be able to release Activision Blizzard games exclusively on Xbox Cloud Gaming, nor will it have exclusive control over the licensing terms of Activision Blizzard games on rival services.

UK regulators are already treating this as a new deal, with the Competition and Markets Authority (CMA) opening a new “phase 1” investigation into this restructured deal. Microsoft will now need to wait to see if the European Commission also needs a refresh notification for the deal and more regulatory headaches.

Source: The Verge