Microsoft / Activision Blizzard (ex-cloud streaming rights) merger inquiry

The CMA investigated the anticipated acquisition by Microsoft Corporation of Activision Blizzard, Inc. (excluding Activision Blizzard, Inc.’s non-EEA cloud streaming rights).

From:
Competition and Markets Authority
Published
22 August 2023
Last updated
13 October 2023 — See all updates
Case type:
Mergers
Case state:
Closed
Market sector:
Electronics
Outcome:
Markets - phase 1 undertakings in lieu of reference
Opened:
22 August 2023
Closed:
13 October 2023

Statutory timetable

Phase 1 Action
13 October 2023 Microsoft Corporation’s request for consent to close under Microsoft and Activision Merger Inquiry Order 2023 granted
13 October 2023 Undertakings in lieu of reference accepted
22 September 2023 to 6 October 2023 Consultation on Microsoft Corporation’s request for consent to close under Microsoft and Activision Merger Inquiry Order 2023
22 September 2023 to 6 October 2023 Consultation on proposed undertakings in lieu of reference
22 September 2023 CMA to consider undertakings offered
22 September 2023 Decision announced
22 August 2023 to 1 September 2023 Invitation to comment
22 August 2023 Launch of merger inquiry

Phase 1

13 October 2023: The CMA has decided to grant consent for Microsoft Corporation to acquire Activision Blizzard, Inc. (excluding Activision Blizzard, Inc.’s non-EEA cloud streaming rights).

Undertakings in lieu of reference accepted

13 October 2023: The CMA has accepted undertakings in lieu of reference to a Phase 2 investigation for Microsoft Corporation to acquire Activision Blizzard, Inc. (excluding Activision Blizzard, Inc.’s non-EEA cloud streaming rights).

22 September 2023: following a request by Microsoft Corporation under paragraph 12 of the Microsoft and Activision Merger Inquiry Order 2023, the CMA is consulting on whether to give consent to Microsoft Corporation to acquire Activision Blizzard, Inc. (excluding Activision Blizzard, Inc.’s non-EEA cloud streaming rights).

Consultation: undertakings in lieu of reference

22 September 2023: The CMA is consulting on proposed undertakings in lieu of a reference to a Phase 2 investigation for Microsoft Corporation to acquire Activision Blizzard, Inc. (excluding Activision Blizzard, Inc.’s non-EEA cloud streaming rights).

CMA to consider undertakings offered

22 September 2023: The CMA considers that there are reasonable grounds for believing that the undertakings offered by Microsoft Corporation and Activision Blizzard, Inc., or a modified version of them, might be accepted by the CMA under the Enterprise Act 2002.

Reference unless undertakings accepted

22 September 2023: The CMA has decided, on the information currently available to it, that it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom. This merger will be referred for a phase 2 investigation unless the parties offer acceptable undertakings to address these competition concerns.

Launch of merger inquiry

22 August 2023: The CMA announced the launch of its merger inquiry by notice to the parties.

Invitation to comment: closed on Friday 1 September

Microsoft Corporation (Microsoft) and Activision Blizzard, Inc. (Activision) have notified to the Competition and Markets Authority (CMA) an acquisition by which Microsoft will acquire Activision, excluding Activision’s cloud streaming rights outside of the European Economic Area (EEA). As part of the proposed acquisition, Activision’s global cloud streaming rights (excluding the EEA) for all current and future Activision PC and console games released during the next 15 years will be divested to Ubisoft Entertainment SA (Ubisoft).

The divestment will take place immediately before completion of Microsoft’s acquisition of Activision. Ubisoft will also receive a non-exclusive licence for Activision’s EEA cloud gaming rights to enable it to stream and sub-license streaming of Activision games in that region. At the same time, Microsoft will receive a non-exclusive licence from Ubisoft for cloud streaming rights to the extent necessary for Microsoft to fulfil its obligations under its commitments to the European Commission and certain existing third-party cloud streaming agreements.

The terms of the transaction will allow Ubisoft to commercialise these rights to other cloud gaming services providers (including to Microsoft itself). Ubisoft will compensate Microsoft for the cloud streaming rights to Activision’s games through a one-off payment and through a market-based wholesale pricing mechanism, including an option that supports pricing based on usage.

Ubisoft will have the right to license out the cloud streaming rights to Activision’s games under any business model of its choosing, including buy-to-play, multigame subscription services, or any other model that may arise. Ubisoft will also be able, for a fee, to require Microsoft to adapt Activision’s titles to operating systems other than Windows, such as Linux, if it decides to use or license out the cloud streaming rights to Activision’s titles to a cloud gaming service that runs a non-Windows operating system.

The CMA has previously investigated the anticipated acquisition by Microsoft of (the entirety of) Activision, concluding, in its Final Report issued on 26 April 2023, that the creation of that relevant merger situation may be expected to result in a substantial lessening of competition (SLC) in the supply of cloud gaming services in the UK, and that prohibition of that transaction was an effective and proportionate remedy to address that SLC and any resulting adverse effects. On 22 August 2023, the CMA imposed a Final Order that prohibits Microsoft from acquiring an interest in Activision unless it obtains prior written consent to do so from the CMA.

The CMA is considering whether it is or may be the case that this merger, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in an SLC within any market or markets in the United Kingdom for goods or services.

The CMA therefore invites comments from any interested party on the impact that the newly structured merger could have on competition in the UK. In light of the substantial overlap with the matters considered in the Final Report of 26 April 2023 and the matters at issue in this investigation, the CMA currently expects to rely heavily on the evidence and analysis undertaken for the purposes of that report in this investigation.

Contact

Please send written representations about any competition issues to [email protected].

Your name and contact details are your personal data. In collecting, receiving, storing, accessing and using your personal data, the CMA, as controller, is processing your personal data. The CMA processes personal data in accordance with data protection law. The CMA is processing your personal data so that it can contact you again, should it need further help or information from you, in order to carry out its merger work under Part 3 of the Enterprise Act 2002. For more information about how the CMA processes personal data and your rights relating to that data, please see our Privacy Notice.

Updates to this page

Published 22 August 2023
Last updated 13 October 2023 + show all updates

  1. Full text Decision for consent under the Final Order, Decision for final acceptance of Undertakings in Lieu, and Final Undertakings in Lieu published.

  2. Update to Phase 1 and documents published

  3. First published.

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