US FTC asks court to block Microsoft acquisition of Activision Blizzard

Government moves to halt any final deal that would make for largest in the history of video game industry

The FTC said Microsoft and Activision had signalled the deal could close as soon as Friday. Reuters

The US Federal Trade Commission asked a court to temporarily block Microsoft's acquisition of Activision Blizzard on Monday, seeking to halt the deal from closing before the government's case against the $69 billion deal is heard.

The FTC said Microsoft and Activision had signalled the deal could close as soon as Friday and asked a federal judge to block any final agreement before 11.59pm EST on June 15.

The agency said the deal, which would be the largest for Microsoft and the largest in the history of the video game industry, would give Microsoft the “ability and increased incentive to withhold or degrade Activision’s content in ways that substantially lessen competition”.

The FTC said without action by a judge the combined firm “could alter Activision’s operations and business plans” and could allow the software company to gain access to sensitive business information.

The agency, which enforces antitrust law, has already asked an in-house administrative judge to block the transaction on antitrust grounds in early December, arguing it would give Microsoft's Xbox exclusive access to Activision games, leaving Nintendo consoles and Sony Group's PlayStation out in the cold.

Microsoft's bid to acquire the Call of Duty video game maker in a $69 billion deal was approved by the EU in May, but British competition authorities blocked the takeover in April.

Shares in Microsoft closed up 1.5 per cent on Monday, while Activision fell 0.8 per cent.

“We welcome the opportunity to present our case in federal court,” said Microsoft president Brad Smith in a statement to Reuters. Activision did not comment.

Microsoft has said the deal would benefit gamers and gaming companies alike, offering to sign a legally binding consent decree with the FTC to provide Call of Duty games to rivals including Sony for a decade.

When announcing the deal in January 2022, Microsoft said they expected it would close in their 2023 fiscal year, which ends in June.

An FTC spokeswoman said: “In light of that, and public reporting that Microsoft and Activision Blizzard are considering closing their deal imminently, we have filed a request for a temporary restraining order to prevent them from closing while review continues.”

The case reflects the muscular approach to antitrust enforcement taken by the administration of US President Joe Biden.

But antitrust experts say the FTC faces an uphill battle to convince a judge to block the deal because of the voluntary concessions offered by Microsoft to allay fears it could dominate the gaming market.

A trial at the FTC's in-house administrative court is scheduled to begin on August 2.