Politico is reporting that the United States Federal Trade Commission (the primary regulator of corporate acquisitions in the United States) is “likely” planning a lawsuit that would attempt to halt Microsoft’s $68.7 billion acquisition of Activision Blizzard. If the agency chooses to file a lawsuit, it could come as early as next month.
Sources speaking to Politico said that plans for a lawsuit were not finalized yet (the FTC’s four commissioners have not formally issued a complaint), but staff reviewing the deal are reportedly “skeptical” of the arguments presented by the two companies. The CEOs of both companies—Microsoft’s Satya Nadella and Activision Blizzard’s Bobby Kotick—have reportedly been deposed as part of this process.
If the FTC were to file such a lawsuit, it would be the most significant antitrust prosecution in some time. FTC Chair Lina Khan has spent 2022 signaling her intent to reign in larger tech mergers. The Commission filed a lawsuit to halt Meta’s purchase of VR exercise developer Within, and reportedly “scrutinized” Sony’s acquisition of Destiny 2 developer Bungie.
The $3.6 billion acquisition of Bungie was allowed to conclude.
This is the first time in months that we’ve heard any indication of regulatory activity to Microsoft’s acquisition of Activision Blizzard from the FTC. In March, a group of US Senators urged the Commission to examine the deal.
The tech giant has been tangling with objections filed by PlayStation maker Sony in Brazil, the European Union, and the United Kingdom. Regulators in the latter two regions have signaled their intent to investigate the merger more deeply.
Meanwhile Sony’s objections to the acquisition have grown louder and more public in recent months. Just today, the company stated that it would be at risk of “losing significant revenues” if the deal went through.
However, the global regulatory scrutiny applied to the deal doesn’t necessarily mean it will fall apart anytime soon. Both Microsoft and Activision Blizzard (particularly Kotick) are eager for it to go through.
If we look at other major media mergers from the last decade, it’s possible that the deal could be allowed to conclude, so long as Activision Blizzard spins off one or multiple of its divisions into an independent company.
Update 11/28: A spokesperson for Activision Blizzard provided the following statement in response to word Politico’s report: “Any suggestion that the transaction could lead to anticompetitive effects is completely absurd,” they said. “This merger will benefit gamers and the U.S. gaming industry, especially as we face increasingly stiff competition from abroad.”
“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.”