FTC sues to block Microsoft’s Activision Blizzard merger

The Federal Trade Commission has filed an antitrust lawsuit in a bid to block Microsoft's planned $68.7 billion takeover of Activision Blizzard. The FTC started looking into the deal and its potential impact on the video game market soon after it was announced in January. Evidently, the agency was concerned enough to pump the brakes on the buyout.

The FTC's commissioners voted in favor of the lawsuit along party lines. The commission's three Democratic approved it and the Republican Commissioner Christine S. Wilson voted against it.

While the lawsuit doesn't necessarily kill the deal, it's unlikely to be resolved by July, as Politico, which had reported that an FTC bid to block the merger was likely, recently noted. That was the deadline Microsoft and Activision set for closing the deal. If the acquisition hasn't closed by then, the companies will have to renegotiate the agreement or even walk away from the merger. Regulators in other jurisdictions have been taking a close look at the deal, including in the UK and the European Union (which should complete its investigation by late March). 

Sony is the merger's most prominent opponent. It has expressed concern that Microsoft would make games such as Call of Duty exclusive to Xbox platforms (which could cost Sony hundreds of millions of dollars a year). However, Microsoft has said it wants to keep Call of Duty on PlayStation and it claims to have offered Sony a 10-year agreement to that effect.

Just ahead of the FTC's anticipated vote, Microsoft said it struck a deal with Nintendo to bring Call of Duty games to the company's systems if the merger closes. Call of Duty will also remain on Steam as part of a separate pact with Valve.

Microsoft and Activision have been downplaying the significance of the deal in an attempt to appease regulators and push it through. For one thing, Microsoft has claimed that Sony has more exclusive games, “many of which are better quality,” in a filing with the UK's Competition and Markets Authority (CMA). It also said Activision Blizzard doesn't have any “must-have” games, despite having some of the most popular titles in the world (including Call of Duty: Modern Warfare II, Overwatch 2 and World of Warcraft) under its umbrella.

That said, Microsoft has suggested that the acquisition the deal is more about gaining a foothold in the mobile gaming market, where Activision's King division is a major player. For instance, Candy Crush Saga has had more than 3 billion downloads.

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