US FTC Seeks Injunction Blocking Microsoft-Activision Deal

The US competition regulator has moved to block Microsoft from completing its $68.7 billion (£55bn) acquisition of Activision Blizzard, as it pursues legal action over the deal.

The Federal Trade Commission (FTC) late on Monday applied for a temporary restraining order and preliminary injunction ahead of a 18 July deadline agreed by the two firms to close the deal.

If Microsoft fails to complete the deal, which was originally announced in January 2022, it could end up owing Activision Blizzard a termination fee of up to $3bn.

The FTC told the District Court for the Northern District of California that a preliminary injunction was necessary “because Microsoft and Activision have represented that they may consummate the Proposed Acquisition at any time”.

Injunction

If Microsoft were to carry out the acquisition it would be “would be difficult, if not impossible” to reestablish the status quo at a later date, should the FTC’s challenge succeed.

The FTC’s hearing date, and the date of an appeal by Microsoft of the UK’s Competition and Markets Authority (CMA) to block the deal, both come after the 18 July deadline.

The deal, which would be the biggest in the history of the videogame industry, has divided regulators over whether it would diminish competition and harm consumers.

Microsoft is seeking to use the deal to gain an edge over market leader Sony, whose PlayStation competes with Microsoft’s Xbox.

Regulators divided

European Union regulators initially expressed concerns, but approved the deal in May after Microsoft offered ten-year licensing deals to rivals. Sony has not accepted such a deal.

Meanwhile the UK’s CMA blocked the deal in April, citing potential harm to the nascent market for cloud gaming, a decision Microsoft is challenging in court.

The FTC’s case, initially filed in December 2022, is due to be heard in August.