Why Microsoft had to relinquish Activision’s cloud-gaming rights outside Europe

13.10.2023 - 15:01 / techcrunch.com

Microsoft has finally done it — nearly two years after first revealing plans to acquire gaming giant Activision Blizzard in a mammoth $68.7 billion deal, it has managed to secure the final regulatory clearance required to make Activision a fully-fledged subsidiary. But with one notable caveat.

For the next 15 years, Microsoft is relinquishing cloud-streaming rights for all Activision games outside the European Economic Area (EEA), a region that constitutes the 27 European Union (EU) members plus Iceland, Liechtenstein and Norway. This means that French game publisher Ubisoft is also a big winner, as it will have exclusive global streaming rights outside the EEA, while inside the EEA it will share streaming rights with rivals, including Microsoft/Activision.

There is no escaping the fact that Microsoft has had to give a sizeable concession to rubberstamp its Activision acquisition, one that impacts current and future Activision titles that Microsoft wants to make available through the cloud, including the Call of Duty, Overwatch, and World of Warcraft franchises.

The prologue to all this was written by the Competition and Markets Authority (CMA), a non-ministerial government department (NMGD) that oversees all-things antitrust in the U.K.

With the European Commission (EC) approving the Activision deal (albeit with conditions), and the U.S. Federal Trade Commission (FTC) failing to block the deal, this meant that the CMA ultimately faced the wrath of one of the world’s biggest companies alone, on its hypothesis that the combined Microsoft and Activision company would “substantially weaken competition” and create “…the most powerful operator” in the cloud-gaming market.

While there are arguments to support or decry its position, the CMA’s remit applies purely to the U.K. market — so how come Microsoft is giving up rights globally? The reality is, trying to oven-bake a U.K.-specific deal is impractical on a multitude of levels. If Microsoft wanted to gain approval from the CMA, it had to come back to the table with a restructured deal that didn’t make the U.K. appear like a second-class citizen.

“A U.K.-only remedy wouldn’t really be workable,” Tom Smith, a former CMA legal director who’s now partner at London-based law firm Geradin Partners, explained to TechCrunch. “U.K. consumers could miss out on developments that happen elsewhere — the CMA would be very sensitive about a perception that U.K. consumers are disadvantaged in the future.”

So Microsoft knew that any changes it made to its original deal had to apply globally to create a level playing field, so to speak. However, Microsoft had already reached a deal with the European Commission that would allow Activision games to be streamed via any other