FTC asks US court to block Microsoft-Activision Blizzard deal

The US Federal Trade Commission has asked a federal court to stop Microsoft from closing its $75bn acquisition of Activision Blizzard, in a move that piles pressure on the gaming industry’s biggest deal.

The antitrust watchdog last year sued to block the transaction through its own in-house court proceedings, which are set to get under way in August. But on Monday it filed a separate request in a California federal court to prevent Microsoft from closing the deal before a decision is handed down. Challenging a deal is more difficult after it is completed.

The FTC has asked the court to rule by Thursday on its request for a temporary restraining order.

“The proposed acquisition would continue Microsoft’s pattern of taking control of valuable gaming content,” the FTC said in the filing. “With control of Activision’s content, Microsoft would have the ability and increased incentive to withhold or degrade Activision’s content in ways that substantially lessen competition — including competition on product quality, price, and innovation.”

Bobby Kotick, chief executive of Activision, which makes the blockbuster game series Call of Duty, said in an email to employees on Monday: “This is a welcome update and one that accelerates the legal process. We will now have the opportunity to more quickly present the facts about our merger.”

Prior to the court filing, Brad Smith, Microsoft’s vice-chair and president, had said: “We welcome the opportunity to present our case in federal court. We believe accelerating the legal process in the US will ultimately bring more choice and competition to the market.”

The regulator’s move against Microsoft’s deal is seen as one of the most high-profile challenges brought by Joe Biden’s administration. The president appointed a set of progressive antitrust officials eager to crack down on what they perceive to be anti-competitive conduct in the US economy, among them Lina Khan, the FTC chair.

The UK’s Competition and Markets Authority ruled to block the deal in April, putting the acquisition in serious jeopardy. The CMA argued Microsoft could make Activision’s games exclusive to its own cloud gaming service.

In a break from the UK and US, the EU last month cleared the acquisition, saying Microsoft assuaged its concerns.

The FTC on Monday said the agency had filed the new complaint because of reports that the businesses were considering closing the deal “imminently”.

In an interview with the FT in February, Activision’s Kotick complained that “ideologues” who believed “big is bad” were taking over competition authorities.

Activision had been surprised by the FTC’s decision to sue to halt the deal in December, he said, because “nobody would have expected ideology would have gotten in the way of opportunity”.

The FTC’s treatment of the deal had sharpened corporate America’s concerns that Khan is ushering in a more interventionist antitrust policy. Suzanne Clark, chief executive of the US Chamber of Commerce, cited the agency earlier this year as an example of “unprecedented regulatory over-reach”, which she pledged the business lobby would fight in court.