FTC sues to block Microsoft's $69 billion acquisition of Activision

The commission's decision signals an aggressive stance by federal regulators to thwart the expansion of the biggest companies in the tech industry.

< p class="css-at9mc1 evys1bk0">The Federal Trade Commission, in one of the most aggressive moves by federal regulators in decades to rein in the power of tech industry giants, filed a lawsuit Thursday in justice to block Microsoft's $69 billion acquisition of video game maker Activision Blizzard.

The F.T.C. said the deal would hurt consumers because Microsoft could use Activision's hit games like Call of Duty to lure players away from rivals. Agency commissioners voted 3-1 to approve the filing of the lawsuit.

The decision is a blow to the expansion of the video game business from Microsoft, which has become its largest consumer unit and surpassed $16 billion in annual sales in the last fiscal year. For the F.T.C. chairwoman, Lina Khan, a jurist who rose to fame after writing an article criticizing Amazon, the lawsuit will test whether her aggressive plan to rein in the power of Big Tech can survive in court.

Microsoft's acquisition of Activision would be the biggest consumer technology deal since AOL acquired Time Warner two decades ago. It would marry Microsoft's Xbox console and game streaming service, which many see as the future of gaming, with Activision titles like Call of Duty and Candy Crush. The scale of these games is enormous: Activision claims it has nearly 370 million monthly active users.

“Microsoft has already shown that it can and will withhold content from its rival games,” Holly Vedova, director of the F.T.C.’s Competition Bureau, said in a statement. "Today, we seek to prevent Microsoft from taking control of a leading independent game studio and using it to harm competition in several dynamic and fast-growing game markets."

Microsoft has indicated it will not abandon the deal and will fight in court to keep the acquisition alive.

“We continue to believe that this agreement will broaden competition and create more opportunities for gamers and game developers,” Microsoft President Brad Smith said in a statement. “We have been committed from day one to resolving competition concerns, including offering concession proposals earlier this week to the F.T.C. While we believe in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case before the tr ibunal. Activision chief executive Bobby Kotick said the F.T.C. was the result of a regulatory environment based on "ideology and misconceptions about the tech industry."

"I want to build my confidence in getting this deal done," he wrote. "The allegation that this agreement is anti-competitive does not match the facts, and we believe we will win this challenge."

The agreement between Microsoft and Activision was reviewed by 16 regulators around the world, but the F.T.C. is the first of three key regulators, including in Britain and the European Union, to make a decision on the acquisition.

Microsoft argued that the deal benefits consumers because Microsoft could make Activision's vast library of games available to more people across different platforms and as part of a bundled subscription to Xbox Game Pass, its Netflix-like streaming offering , instead of downloading and purchasing each game individually.

But the F.T.C. said customers would be harmed because Microsoft could abuse Activision's hugely popular games to its advantage, either withholding them from competitors like Sony or exploiting them to gain the upper hand as more games are released in line by harnessing the power of Micro...