FTC lawsuit against Microsoft’s Activision deal prompted by potential EU settlementt

Kareem Anderson

With Microsoft on the brink of a potential EU settlement over its $68.2 billion dollar bid for Activision, the Federal Trade Commission filed its lawsuit to block approval.

According to a report from Bloomberg, the FTC rush to file its complaint with the Microsoft and Activision deal to dissuade the EU from accepting a settlement on the deal as well as steer a narrative the regulating body could use later in its own proceedings.

Bloomberg’s report comes from sources familiar with the regulatory investigations into the Activision deal.

The FTC’s rushed filing was submitted mere hours after a conference call between EU and US regulators in which the former discussed plans to start down a path of resolution to the Activision deal with MIcrosoft, in the form of a settlement.

With the possibility of the narrative around the Activision deal becoming more of formality than prolonged concern for the market, the FTC filed its lawsuit much earlier than it normally does in its investigative process.

As Fried Frank Harris Shiver & Jacobson LLP’s antitrust head Barry Nigro explains to Bloomberg, the FTC simply wanted to, “get out in front of the Europeans in an effort to shape the narrative”.

In filing its lawsuit early, the FTC broke from its original plan to withhold its public position on the deal until Spring as well as its normal course of action to wait until closer to the June 2023 deadline to sort out any settlement terms with Microsoft and the international regulatory community.

While the FTC claims in its official December filing that the Activision deal would afford Microsoft unfair leverage in console, subscription and cloud gaming markets, Microsoft continues to champion its compromise with its most prominent competitor, Sony ahead of any official regulatory settlements.

To assuage fears of market dominance, Microsoft has repeatedly stated its intentions to keep one of the largest franchise titles from publisher Activision, available for not only the PlayStation platform but PC and Nintendo going forward.

With Activision’s Call of Duty franchise accounting for a significant amount of revenue for the publisher, it’s going to be an uphill battle for the FTC to argue that Microsoft would intentionally sever that revenue stream and go upside down on its investment in order to sabotage its competitors.