FTC files lawsuit to block Microsoft-Activision deal: Here's why

The US Federal Trade Commission (FTC) has approached a US court to block Microsoft's $69 billion proposed acquisition of gaming studio Activision Blizzard. This is the latest in the line of challenges the deal, which can potentially change the gaming industry, faces across the world. Let's see what prompted the FTC to file a new lawsuit against the deal.

Why does this story matter?

It's been over a year since Microsoft announced its plan to acquire Activision, the company behind iconic gaming franchises like Call of Duty and Crash. The deal has been under regulatory scanner since then. It has faced the biggest pushback from the FTC and UK's Competition and Market Authority (CMA). The world is closely watching how the legal challenges turn out.

FTC is seeking a preliminary injunction and temporary restraining order

The FTC approached the US District Court for the Northern District of California seeking a "temporary restraining order and a preliminary injunction." The competition watchdog approached the federal court hastily in fear of Microsoft and Activision closing the deal. According to FTC's complaint, the actions are necessary because "Microsoft and Activision have represented that they may consummate the proposed acquisition at any time."

Regulator is wary of Microsoft completing the acquisition

The new FTC complaint comes at a time when Microsoft is progressing with the appeal against CMA's order blocking the deal. However, with the deadline of the deal (July 18) fast approaching, there have been reports about the tech giant completing the acquisition. Since it received the go-ahead from European regulators, it can technically close the deal.

The new complaint is in addition to a larger lawsuit

FTC's new complaint is in addition to the larger lawsuit it filed against the deal in an in-house court in December 2022. The separate lawsuit is filed before a federal court because it can issue a restraining order to stop the completion of the purchase. In the main complaint, the regulator argues that the acquisition would damage the competition in the video game market.

Microsoft and Activision welcomed FTC's lawsuit

Microsoft and Activision welcomed FTC's lawsuit. They see this as an opportunity to fast-track the proceedings. "We welcome the opportunity to present our case in federal court," said Brad Smith, Microsoft president. Activision CEO Bobby Kotick also termed FTC's complaint "positive" because it "accelerates the legal process." If the court does not grant an injunction, it will be a massive blow to FTC.