Microsoft looks to ease UK antitrust worries over Activision deal

Microsoft said it will allow Ubisoft Entertainment to distribute Activision Blizzard games — a move intended to win approval from British antitrust regulators who have held up the company’s $75 billion acquisition of the maker of popular video games including “Call of Duty,” “Guitar Hero,” and “World of Warcraft.”

The announcement by Microsoft, which also agreed to relinquish exclusive cloud streaming rights to all current and future Activision games over the course of the next 15 years, prompted the Competition and Markets Authority, the British government’s anti-monopoly regulator, to reconsider the merger.

The rights to those games will instead be divested in perpetuity to Ubisoft, the French game maker whose popular hits include “Assassin’s Creed,” “Just Dance,” and “Far Cry.”

Ubisoft games are distributed through services such as Amazon Luna and Nvidia’s GeForce Now — consoles that are in direct competition with Microsoft’s Xbox.

By bringing Ubisoft into the picture, Microsoft hopes to sway UK regulators by having an independent third party offer distribution services for Activision games to various cloud systems.

As part of the restructured deal, Ubisoft would compensate Microsoft through a “one-off payment” and a “market-based wholesale pricing mechanism,” Microsoft President Brad Smith wrote in a blog post.

“The agreement provides Ubisoft with a unique opportunity to commercialize the distribution of games via cloud streaming,” Smith wrote.

“The agreement will enable Ubisoft to innovate and encourage different business models in the licensing and pricing of these games on cloud streaming services worldwide.”

British regulators also released a statement announcing that they had reopened their probe into the merger.

“The CMA has opened a new phase 1 investigation into a new, restructured deal by Microsoft to buy Activision,” the agency said in a statement.

“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,” the CMA added.

“Microsoft has stated that the restructured deal is intended to address the concerns set out” in its April ruling that blocked the merger, citing concerns about the impact on competition in cloud gaming.

The CMA is expected to hand down its decision by Oct. 18.

Last month, a US federal judge refused the Federal Trade Commission’s bid to impose a preliminary injunction that would halt the merger.

The FTC, led by antitrust crusader Lina Khan, eventually withdrew its case before an in-house judge.

Activision Blizzard’s stock price rose by more than 1.1% as of 10:30 a.m. Eastern time on Tuesday.

Shares of Microsoft were up by around 0.6%.