EU Regulators Set to Assess Microsoft's Groundbreaking Plan for Non-EU Cloud Streaming Rights - Prepare to Be Astonished!

2023-08-23 10:03:47

EU Regulators to Evaluate Microsoft's Plan for Non-EU Cloud Streaming Rights

Antitrust regulators in the European Union (EU) are set to assess the impact of Microsoft's proposal to sell its non-EU cloud streaming rights to Ubisoft Entertainment. This proposal is part of Microsoft's efforts to remedy its acquisition of UK-based video game company Activision Blizzard. The regulators will carefully evaluate whether this proposal adequately addresses competition concerns and promotes a fair market environment. While Microsoft has already received approval from Europe for the Activision deal, it still faces challenges in the UK. The proposed solution aims to ensure the deal's success in the UK while addressing any potential negative impact on the EU economy.

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Background

Microsoft announced its intent to acquire Activision Blizzard for a staggering £68.7 billion in January 2023. This acquisition would grant Microsoft control over popular gaming franchises like Call of Duty, World of Warcraft, and Candy Crush. However, the deal raised concerns among antitrust regulators in the EU and other regions.

The EU Commission launched a probe into the deal in March 2023, expressing worries about potential harm to competition in the video game streaming services market. The Commission specifically focused on the nascent cloud gaming market, where Microsoft already holds a significant position through its Xbox Game Pass service.

To address these concerns, Microsoft made various commitments, including offering a ten-year licensing deal to rivals and providing free licenses to users in EU nations. These remedies were deemed pro-competitive by the EU regulators. However, Microsoft still needs a solution to satisfy UK regulators.

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Microsoft's Proposed Remedy

Microsoft has put forth a new remedy to address the UK regulators' scrutiny of the deal. The company plans to sell its non-EU cloud streaming rights to Ubisoft, a French video game company. This proposal would enable Ubisoft to offer Activision's games on Microsoft's cloud gaming platform, ensuring a fair market without any unfair advantages.

In addition, Microsoft has committed to providing access to its cloud gaming platform to other video game brands on a non-discriminatory basis. This ensures fair competition in the market, allowing other players to have a fair chance to compete with Microsoft.

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The proposed sale of non-EU cloud streaming rights to Ubisoft is a significant step in Microsoft's efforts to secure approval for the Activision acquisition. This agreement would grant Ubisoft complete control over streaming rights for all of Activision's console games, such as Call of Duty and World of Warcraft, outside of the EU. This move helps address regulators' concerns by reducing Microsoft's dominance and promoting a more level playing field.

Key Points About the Proposed Deal:

• Ubisoft will compensate Microsoft for the cloud streaming rights to Activision's games through a one-off payment and market-based royalty rates.
• The deal grants Ubisoft the ability to make Activision's games available on its own cloud gaming platform.
• The sale of non-EU cloud streaming rights is a pivotal step in Microsoft's strategy to secure approval for the Activision acquisition.
• The UK's Competition and Markets Authority (CMA) is currently reviewing the deal.
• The CMA has expressed concerns about potential price increases for users and a reduction in the quality and variety of video games.
• The sale of non-EU cloud streaming rights to Ubisoft aims to address these concerns and ensure competition in the market for cloud gaming services.

The proposed sale of non-EU cloud streaming rights to Ubisoft is a crucial move in Microsoft's plan to acquire Activision. By addressing concerns about competition in the UK gaming market, Microsoft hopes to gain approval for the deal and expand its presence in the gaming industry.

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Assessment by EU Antitrust Regulators

EU antitrust regulators will examine Microsoft's proposal in depth to determine whether it effectively addresses competition concerns and ensures a fair market environment. They will assess the proposal's impact on the cloud gaming market and related sectors, such as video game streaming services. Furthermore, the regulators will evaluate if the proposed sale of non-EU cloud rights to Ubisoft could affect their initial approval of the Activision deal.

In response to a query from Reuters, a spokesperson for the European Union executive stated that, although Microsoft previously received EU approval, the regulators need to reassess the deal in light of the latest proposal.

Final Thoughts

The assessment of Microsoft's proposal by EU antitrust regulators plays a pivotal role in reviewing the potential acquisition of Activision. The regulators aim to evaluate whether the proposal effectively addresses concerns about competition and promotes a level playing field in the market. The outcome of their evaluation will significantly impact the video game industry and the nascent cloud gaming market.

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