FTC Officially Moves To Block Microsoft's Activision Blizzard Acquisition

The United States Federal Trade Commission (U.S. FTC) has asked a court to block the proposed $68.7 billion Activision Blizzard acquisition by Microsoft. In its court filing, the regulator has requested "a temporary restraining order" and a preliminary injunction to block the merger. The key concern is that Microsoft could skew the distribution of Activision Blizzard games in its own favor by withholding it from other platforms, or selectively degrading the experience.

In its complaint, the FTC claims that the merger is "reasonably likely to substantially lessen competition or tend to create a monopoly in multiple markets because it will create a combined firm with the ability and increased incentive to use its control of Activision tiles to disadvantage Microsoft's competitors."

The filing mentions titles like "Call of Duty," "Diablo," and "Overwatch" as top-tier gaming franchises that Microsoft could potentially leverage to tilt the competition in its favor. As a precedent, the court cites Microsoft's acquisition of Bethesda, and how despite regulatory assurance, Microsoft locked AAA titles like "Redfall," "Starfield," and the upcoming "Elder Scrolls" game to its own gaming platforms. The FTC originally moved forward with an inquiry into the acquisition bid back in December 2022, noting that the mega-merger could hamper rivals' access to popular content, disrupt the high-performance console market, and shift the subscription service landscape, as well.

As the FTC moves ahead with legal action following in the footsteps of the U.K. government, the EU has approved the merger following assurances by Microsoft that the deal won't disrupt the competition. Microsoft, meanwhile, offered to keep "Call Duty" on rival platforms for the next decade, a deal that was accepted by Nintendo and rejected by Sony.

Circling back to the FTC's concerns, it claims that Microsoft's acquisition could have wide-ranging implications including, but not limited to, "dampened innovation, diminished consumer choice, higher prices, and/or lower quality products, and harm to the millions of Americans who benefit from competition in video game consoles and subscription services." 

It also flags concerns that the merger would not only disrupt the market for gaming consoles, but also give Microsoft an undue advantage when it comes to game subscription services like the Xbox Game Pass, and cloud-based game streaming services. A court trial over the FTC's concerns is scheduled for early August. In its complaint, the FTC requested a court-issued block as well as an injunction because it alleges that Microsoft and Activision Blizzard could close the deal later this week.

Responding to the FTC action, Microsoft President Brad Smith tweeted that the legal move will "accelerate the decision-making process." Smith expressed confidence in Microsoft's vision, which includes assurances that the company has no immediate plans to make Activision Blizzard games exclusive to its own platform and that no anti-competitive tactics are on the Xbox division's roadmap.