• M&A
  • December 9, 2022
  • 5 minutes read

U.S. FTC Sues To Block Microsoft’s $69B Activision Takeover

The United States government has donned its antitrust attire once again and is seeking to block a major merger in…

Activision logo

The United States government has donned its antitrust attire once again and is seeking to block a major merger in the gaming industry. The Federal Trade Commission (FTC) has filed a lawsuit to prevent the acquisition of video games publisher Activision by tech giant Microsoft.

  • Microsoft entered an agreement to buy Activision for $69bn in cash in January 2022, representing the biggest-ever acquisition in the gaming sector. The acquisition hasn’t closed because it’s facing considerable regulatory scrutiny in both the U.S. and abroad. This November, the European Union opened an in-depth probe into the deal.

The FTC argues that acquiring Activision will allow Microsoft to harm competitors of its Xbox gaming consoles and game subscription and cloud gaming services, e.g., by denying rivals access to Activision’s vast library of gaming content. The agency pointed to a previous situation when Microsoft acquired game developer Bethesda Softworks and made some of its titles exclusive to the Xbox console. It also argued that Microsoft could raise prices or worsen the experience of Activision’s games on competing consoles.

There’s a catch with this antitrust case. The FTC filed it in its administrative court instead of a federal court and didn’t ask for a court injunction to halt the deal. These caveats suggest that the agency doesn’t have the utmost confidence in its case appearing before federal judges.

For reference, the FTC filed a federal lawsuit and asked for an injunction in its recent undertaking to block tech giant Meta‘s much smaller ($400mn) acquisition of virtual reality content creator Within (the trial kicked off on Thursday).

  • Microsoft has presented some concessions and assurances to convince regulators to approve the takeover. The tech giant recently offered PlayStation console maker Sony a 10-year deal for Call of Duty games, but the company hasn’t yet accepted it. Call of Duty is one of Activision’s best-selling franchises; the latest title, Modern Warfare 2, recently grossed $600mn in sales in its opening weekend.


  • Microsoft also offered a similar deal to the makers of the Nintendo and Valve Steam Deck consoles, to which they agreed.

Microsoft’s proposed takeover is under investigation in the US, EU, and the UK, unsurprisingly given it’s the biggest acquisition yet in the gaming industry. It’s possible that the FTC didn’t pursue a federal lawsuit or injunction because Microsoft is facing pressure from other powerful regulators.


  • The FTC has pursued a more aggressive antitrust strategy under the Biden administration than the preceding administration. It has filed a considerable number of lawsuits to block big mergers and succeeded in some cases, including a recent ruling halting the merger of two book publishing giants, Penguin Random House and Simon & Schuster. Yet, it failed to block other major mergers such as UnitedHealth Group’s $13bn acquisition of Change Healthcare.

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