FTC files to temporarily block the Microsoft-Activision deal

13 Jun 2023

Image: Dinosaur918 via Wikimedia Commons.

The block will ‘maintain the status quo’ while the FTC decides if Microsoft acquiring Activision violates US law.

With little over a month left before the deadline approaches for Microsoft’s acquisition of Activision Blizzard, the US Federal Trade Commission (FTC) has issued a temporary restraining order and preliminary injunction on the deal.

In a complaint filed with a US district court and seen by CNBC yesterday (12 June), the FTC argued the injunction and restraining order are “necessary to maintain the status quo and prevent harm to competition” while the watchdog determines whether the deal breaks US antitrust law.

The US regulator first moved to block the $69bn deal in December, when it sued Microsoft and Activision on grounds that the acquisition would enable the software giant to “suppress competitors”.

Microsoft first announced plans to acquire the gaming company behind Call of Duty and Candy Crush in January last year. It was estimated at the time that the acquisition would make Microsoft the world’s third-largest video game company by revenue after Tencent and Sony.

Soon after the announcement, the two companies were hit by a barrage of regulatory scrutiny across both sides of the Atlantic. By September, a UK watchdog said the deal could harm rivals in the gaming sector. Two months later, the EU launched a probe under similar concerns.

In April, the UK’s Competition and Markets Authority gave the deal its biggest blow by blocking the deal entirely, on grounds that it would stifle innovation and choice in cloud gaming.

However, the EU gave Microsoft and Activision its blessing to go ahead with the deal last month following an in-depth review.

It said in a statement that it had “based its decision on hard evidence, and on extensive information and feedback from competitors and customers, including from game developers and distributors as well as cloud game streaming platforms in the EU”.

In its latest complaint, the FTC is worried Microsoft would have the power to “withhold or degrade” Activision’s gaming products through price, game quality and experience on competitors’ offerings, or by “withholding content from competitors entirely.”

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Activision Blizzard. Image: Dinosaur918 via Wikimedia Commons (CC BY-SA 3.0)

Vish Gain is a journalist with Silicon Republic