US regulators have requested a court injunction to prevent Microsoft from finalizing its $69 billion acquisition of Activision Blizzard, the publisher of the popular game franchise Call of Duty.
The US Federal Trade Commission (FTC) argues that the deal could substantially reduce video game competition.
This action follows the UK’s decision to block the deal earlier due to concerns about its impact on competition, although the European Union has approved it. The trial in the US is set to begin in August.
The FTC stated in a court filing that it seeks a preliminary injunction to prevent potential harm until it determines whether the acquisition violates US antitrust laws.
The deal must be approved by regulatory bodies in the UK, EU, and US.
The European Commission approved the acquisition, citing Microsoft’s offer of 10-year free licensing deals that promise fair competition in the market by providing European consumers and cloud game streaming services access to Activision’s games.
However, the UK’s Competition and Markets Authority (CMA) blocked the deal in April, expressing concerns about reduced innovation and limited game choices.
Microsoft and Activision have criticized the UK’s decision and intend to appeal. Microsoft’s President, Brad Smith, called it the company’s ‘darkest day’ in its four decades of operation in the country.
Responding to the FTC’s announcement, Smith welcomed the opportunity to present Microsoft’s case in federal court and stated that expediting the legal process will ultimately enhance choice and competition in the market.
The FTC’s move comes after it had previously asked an administrative judge to block the deal last December, citing antitrust concerns related to Microsoft gaining exclusive access to Activision games on Xbox, potentially excluding Nintendo and Sony consoles.
Industry experts note that Microsoft’s bid for Activision is crucial as it tries to catch up with its main competitor, Sony.
The acquisition aligns with Microsoft’s focus on its Xbox Game Pass service, described as the ‘Netflix of games.’
The company believes that the future of gaming lies in subscription-based libraries and cloud gaming rather than individual game purchases, which are currently the dominant model.