Microsoft's bid to acquire the video game publisher Activision Blizzard reportedly could face a major roadblock as early as next month.
The U.S. Federal Trade Commission (FTC) is likely to file an antitrust lawsuit to block the $69 billion takeover, according to Politico, citing people familiar with the matter.
A lawsuit challenging the deal is not guaranteed, and the FTC’s four commissioners have yet to vote out a complaint or meet with lawyers for the companies.
The FTC staff reviewing the deal are skeptical of the companies’ arguments, those people said.
The Activision Blizzard Booth during the Electronic Entertainment Expo in Los Angeles. (AP Photo/Jae C. Hong / AP Images)
At the center of the FTC’s concerns is whether acquiring Activision would give Microsoft an unfair boost in the video game market.
Microsoft’s Xbox is number three to the industry-leading Sony Interactive Entertainment and its PlayStation console.
Sony is concerned that if Microsoft made hit games like Call of Duty exclusive to its platforms Sony would be significantly disadvantaged.
Microsoft has pledged to continue making Call of Duty available on Sony’s Playstation console, and recently made an offer to give Sony access to the game for the next 10 years.
An Activision spokesman gave FOX Business the following statement.
"Any suggestion that the transaction could lead to anticompetitive effects is completely absurd. 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."
Microsoft logo is seen on a smartphone placed on displayed Activision Blizzard logo. (REUTERS/Dado Ruvic/Illustration / Reuters)
Shares of Activision fell about 4% in extended trading.
Microsoft announced the deal in January, in the biggest gaming industry deal in history.
Microsoft gave the following statement to FOX Business.
"As we have said before, we are prepared to address the concerns of regulators, including the FTC, and Sony to ensure the deal closes with confidence. We’ll still trail Sony and Tencent in the market after the deal closes, and together Activision and Xbox will benefit gamers and developers and make the industry more competitive.."
Bobby Kotick, CEO Activision Blizzard Inc.and Satya Nadella, CEO Microsoft (Photographer: Patrick T. Fallon/Bloomberg via Getty Images | Microsoft / Getty Images)
The EU opened a full-scale investigation earlier this month. The EU competition enforcer said it would decide by March 23, 2023, whether to clear or block the deal.