Microsoft inks Nvidia game deal to assuage regulators over Activision merger

Regulators and competitors like Sony have come out hard against the proposed Microsoft-Activision tie-up.

Britain earlier this month said the deal could harm gamers by weakening the rivalry between Xbox and PlayStation, result in higher prices, fewer choices and less innovation for millions of players, as well as stifling competition in cloud gaming.

A Nvidia deal could allay those concerns by ensuring more ways for consumers to get games controlled by Microsoft.

Microsoft President Brad Smith told a news conference on Tuesday he was now more optimistic of getting the Activision acquisition done after the Nvidia licensing deal as well as a similar arrangement with Nintendo Co Ltd.

Phil Eisler, vice president and general manager of Nvidia’s GeForce Now segment, said that titles such that “Call of Duty” will not be available on Nvidia’s service until Microsoft has completed its acquisition of Activision but that other Microsoft-owned titles such as “Minecraft” are covered immediately under the 10-year license deal.

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“We were a little concerned about it at the beginning,” Eisler said of the Microsoft-Activision deal. “But then we reached out to Microsoft, and they were very open about wanting to enable cloud gaming and work with us on a 10-year license agreement. So over time, they made us more and more comfortable with it.” Shares of Microsoft were down 2%, Nvidia was down 2.6% and Activision was down 0.7% in a broadly lower market on Tuesday afternoon.

Nvidia said it now supports the Xbox maker’s bid to purchase Activision. European officials issued Microsoft a warning about the deal earlier this month, while the US Federal Trade Commission has asked a judge to block the deal. The UK competition watchdog has said Microsoft may have to divest “Call of Duty.”

Nvidia said in a press statement that it has struck a 10- year deal with Microsoft to immediately start work on integrating Xbox games into its GeForce Now streaming games service, which has 25 million users in more than 100 countries.

Smith said he hoped that rival Sony Group Corp will consider doing the same type of deal with Nvidia.

Sony has led opposition to the Microsoft-Activision deal, saying last year it was “bad for competition, bad for the gaming industry and bad for gamers themselves.”

Apart from Sony and Nvidia, companies including Alphabet Inc’s Google had expressed concerns to the FTC about the deal, according to media reports.

Microsoft has pledged to keep “Call of Duty” on Sony’s PlayStation. The popularity of the first-person shooter franchise is undimmed nearly two decades after launch, with the latest installment achieving $1 billion sales in its first 10 days in October.

The U.S. tech giant has said the deal is about more than “Call of Duty.” It has said buying the company that also makes “Overwatch” and “Candy Crush” would charge its growth in mobile, PC, and cloud gaming, as well as consoles, helping it compete with the likes of Tencent as well as Sony.