Report: The FTC may try to block Xbox's Activision Blizzard acquisition

Xbox Activision Blizzard
(Image credit: Microsoft)

What you need to know

  • The United States Federal Trade Commission, or FTC, is currently investigating Microsoft's $69 billion acquisition of games publisher Activision Blizzard.
  • According to a new report, sources familiar with the investigation suggest an antitrust lawsuit isn't an impossibility.
  • The FTC commissioners have yet to vote or even to meet with lawyers from Microsoft or Activision Blizzard to discuss concessions, however.
  • If an antitrust lawsuit is eventually filed, Microsoft and Activision Blizzard's deal could be threatened.

The ongoing acquisition of prominent games publisher Activision Blizzard by tech conglomerate Microsoft is a perpetual topic of discussion in the industry, and more fuel is being added to the fire thanks to a new report. It's known that the United States' Federal Trade Commission (FTC), is investigating the impending deal, but new information suggests that a major antitrust lawsuit may be a possibility.

According to the report at Politico, three sources familiar with the FTC's investigation of the Microsoft and Activision Blizzard deal believe the FTC could file an antitrust lawsuit as soon as next month. If the FTC were to file an antitrust lawsuit against Microsoft and Activision Blizzard, it could challenge the deal and ultimately lead to it being abandoned. As of now, however, nothing is certain or guaranteed — and there's still more work to be done in the investigation.

The report goes on to state that the four FTC commissioners have yet to vote on the matter, nor has the FTC met with lawyers from either company to discuss the investigation or to receive potential concessions. Depositions from Microsoft CEO Satya Nadella and Activision Blizzard CEO Bobby Kotick have been completed, but the FTC investigation of the deal is still very much an ongoing process and has yet to be completed. According to Politico's sources, though, FTC staff are skeptical of the companies' arguments in favor of the deal.

The FTC's primary concern regarding Microsoft's acquisition of Activision Blizzard is whether or not the deal would give Xbox a significant advantage in the video games industry over its competitor. This is a subject that has been hotly debated since the acquisition was announced in January of this year.

"Any suggestion that the transaction could lead to anticompetitive effects is completely absurd. This merger will benefit gamers and the U.S. gaming industry, especially as we face increasingly stiff competition from abroad," stated an Activision Blizzard spokesperson. "We are committed to continuing to work cooperatively with regulators around the globe to allow the transaction to proceed, but won’t hesitate to fight to defend the transaction if required."

Xbox Game Pass at Gamescom 2022

(Image credit: Jez Corden | Windows Central)

Of course, the FTC is far from the only organization that is scrutinizing the acquisition of Activision Blizzard, with the UK's Competition and Markets Authority (CMA) being a major player challenging the deal. Earlier on Thursday, statements from both Sony and Microsoft were published as a part of the CMA's continued investigation, with statements from Sony suggesting that the current video games market leader is concerned that Microsoft may become a more competitive force in the industry.

Most of these investigations have been centered around the topic of Call of Duty and its power as a franchise, with Sony repeatedly voicing its fears that Microsoft will tear Call of Duty away from the PlayStation platform in order to harm the company. These fears have continued to be voiced even after Microsoft reportedly offered Sony a 10-year deal to guarantee Call of Duty on PlayStation, and after Microsoft Gaming CEO Phil Spencer asserted that Microsoft's biggest objective with the Activision Blizzard deal isn't to acquire Call of Duty, but to become more competitive in the bustling and profitable mobile gaming market.

Activision Blizzard does control a wide variety of franchises and IPs, many of which counting among Xbox's best games, which would bolster Microsoft's efforts to make Xbox Game Pass an even more compelling gaming subscription service across Xbox consoles, Windows PCs, and other platforms through Xbox Cloud Gaming. Despite these advantages, however, it has been indicated by Microsoft that Xbox would remain the third-place gaming competitor even after the Activision Blizzard deal, following both Sony and Nintendo.

Right now, the FTC's investigation has not resulted in an antitrust lawsuit, which could severely threaten the Microsoft and Activision Blizzard deal, and it may not happen at all. Still, matters could change for the companies in the near future, if the sources in this report are accurate. Public discussions revolving the deal have mostly been positive in Microsoft's favor, especially in light of Sony's recent statements and continued stance, but the deal isn't guaranteed until it clears the scrutiny from various regulators. The companies have until July, 2023 to either close the deal or renegotiate if they run out of time.

Update, Nov. 28, 2022, at 5:30 p.m. CT — A Microsoft spokesperson reached out to Windows Central with the following statement, "As we have said before, we are prepared to address the concerns of regulators, including the FTC, and Sony to ensure the deal closes with confidence. We’ll still trail Sony and Tencent in the market after the deal closes, and together Activision and Xbox will benefit gamers and developers and make the industry more competitive."

Zachary Boddy
Staff Writer

Zachary Boddy (They / Them) is a Staff Writer for Windows Central, primarily focused on covering the latest news in tech and gaming, the best Xbox and PC games, and the most interesting Windows and Xbox hardware. They have been gaming and writing for most of their life starting with the original Xbox, and started out as a freelancer for Windows Central and its sister sites in 2019. Now a full-fledged Staff Writer, Zachary has expanded from only writing about all things Minecraft to covering practically everything on which Windows Central is an expert, especially when it comes to Microsoft. You can find Zachary on Twitter @BoddyZachary.