Report: FTC 'likely' to file lawsuit to block Microsoft/Activision merger

Expand / Some of the Activision franchises that will become Microsoft properties if and when the acquisition is complete. Microsoft / Activision

The Federal Trade Commission will "likely" file an antitrust lawsuit against Microsoft and Activision Blizzard to block the companies' planned $69 billion merger deal. That's according to a new report from Politico citing "three [anonymous] people with knowledge of the matter."

While Politico writes that a trial is still "not guaranteed," it adds that FTC employees "are skeptical of the companies' arguments" that the deal won't be anti-competitive. The sources also confirmed that "much of the heavy lifting is complete" in the commission's investigation, and a complaint could be filed as early as next month.

Sony, the main opponent of the proposed purchase of Microsoft, has publicly argued that an existing three-year contractual guarantee to keep Activision's best-selling Call of Duty franchise on PlayStation is "inadequate on many levels." In response, Microsoft Xbox manager Phil Spencer publicly promised to continue shipping Call of Duty games to PlayStation "as long as there is a PlayStation to ship to". However, it is unclear whether the companies have recorded this offer as a legal agreement; The New York Times reported this week that Microsoft had offered "a 10-year deal to keep Call of Duty on PlayStation."

Numerous statements from Microsoft executives, including Spencer, have suggested the company is less interested in strengthening its position in the "console wars" and more interested in bolstering its mobile subscription, cloud gaming offerings and Game Pass. Beyond Call of Duty, Politico reports that the FTC is concerned about how Microsoft "could leverage future unannounced titles to drive its gaming business."

Microsoft "stands ready to address concerns from regulators, including the FTC, and Sony to ensure the deal is completed in confidence," spokesman David Cuddy told Politico. "We will continue to follow 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."

There are many speed bumps left Reports of a potential FTC lawsuit add to a growing list of troubling signals regarding the proposed purchase from various international governments. Earlier this month, the European Commission announced it was carrying out a "thorough investigation" into the deal. In the UK, a similar "Phase 2" investigation by the country's Competition and Markets Authority has scheduled a hearing next month.

These international investigations are expected to wrap up in March, ensuring the proposed deal won't close before then and giving the FTC some time before it needs to pursue legal action. Any such lawsuit would need to be approved by a majority of the FTC's current four commissioners and would likely begin in the FTC Administrative Court. And whatever the outcome...