US FTC moves to block Microsoft-Activision deal

Despite making concessions to any state-level agency that will listen, Microsoft’s would-be purchase of mega-game publisher Activision Blizzard continues to run into regulatory hurdles. The latest obstacle for the deal is the United States Federal Trade Commission, which has filed an injunction and restraining order to block the nearly $70 billion purchase from going through. The following proceedings will determine whether the US government allows the largest deal in video game history to proceed.

The various steps in the regulatory process are complicated, but competently explained by the Associated Press. Essentially, the FTC had already signaled its opposition to the Microsoft-Activision deal on anti-trust grounds late last year but had not completed the process of formally blocking the merger. This injunction, if approved by a federal judge, will stop the merger dead in its tracks until a trial to determine its legality proceeds. Microsoft and Activision had reportedly been planning to finalize the purchase in July, dealing with the legal fallout afterward…and potentially making it much harder for regulators to undo.

Many analysts had expected Microsoft’s purchase to sail through a merger-friendly US federal system, as has been the case in the video game industry for years. Microsoft’s recent publisher and developer purchases include Obsidian, Double Fine, and Zenimax, bolstering an impressive first-party stable for the PC and Xbox platforms. Adding Activision and Blizzard would give Microsoft control of such enormous gaming franchises as Call of Duty, Diablo, and World of Warcraft. This seems to be one step too far in consolidation for the FTC, much like when AT&T attempted to purchase T-Mobile and essentially turn the US mobile phone service landscape into a duopoly.

Microsoft’s troubles don’t end at American borders. The deal has also been blocked by regulators in the United Kingdom, on fears that Microsoft’s dominant position in the emerging streaming/cloud gaming category could create an unstoppable giant that’s impossible for smaller companies to compete with. Microsoft is appealing the UK ruling (which has the potential to scupper the deal altogether) and “welcomes the opportunity to present our case in federal court” in response to the FTC motion.