Microsoft to sell off Activision’s cloud gaming rights to Ubisoft as it seeks to conclude ABK deal

Microsoft has restructured its plans to merge with Activision Blizzard. In an effort to gain the CMA’s approval and finally wrap up the ABK deal over a year and a half after the $68 billion merger was first announced. Microsoft will offer to divest Activision’s cloud gaming rights by selling them to Ubisoft.

The CMA initially blocked the merger in the U.K. earlier this year, citing concerns over Microsoft’s perceived dominance in the nascent cloud gaming market. However, the regulator seemed to alter its stance in the wake of Microsoft’s legal triumph against the FTC. The two parties (Microsoft and the CMA) have agreed to pause litigation of the former’s appeal, and have pushed back the deadline for the CMA’s final decision to October 18, which is the deal’s new expiration date after it was extended back in July.

Today’s announcement marks a major point in this ongoing story, and it could finally spell the end of regulatory opposition as the CMA stands as the sole major regulatory agency opposing the merger. As Microsoft president Brad Smith states in the post,

Under the restructured transaction, Microsoft will not be in a position either to release Activision Blizzard games exclusively on its own cloud streaming service – Xbox Cloud Gaming – or to exclusively control the licensing terms of Activision Blizzard games for rival services.

While this restructuring of the deal will of course trigger more investigation, Microsoft has stated that it still expects to reach an agreement with the CMA by the October deadline. On the announcement Activision CEO Bobby Kotick had this to say,

We welcome Microsoft’s decision to enter into this agreement and submit a new application to the CMA, which Microsoft believes will address the CMA’s concerns…We will continue to work closely with Microsoft and the CMA throughout the remaining review process, and we are committed to help Microsoft clear any final hurdles as quickly as possible.

Kotick closed by saying “This has been a longer journey than expected.” On that, he speaks for all of us.