FTC Drops Lawsuit: Microsoft's $69 Billion Activision Acquisition Faces New Challenges

In a notable development within the gaming industry, the Federal Trade Commission (FTC) announced on May 22nd the withdrawal of its lawsuit against Microsoft's acquisition of Activision Blizzard for $69 billion. The FTC concluded that further pursuit of the now-completed transaction lacks public interest, thereby ending this prolonged two-year legal battle.

Microsoft announced in January 2022 its intention to acquire Activision Blizzard for nearly $69 billion, marking a historic transaction within the gaming sector. This acquisition positioned Microsoft as the third-largest gaming entity globally, trailing only Tencent and Sony. The purchase diversified Microsoft's Xbox Game Pass with over 30 premier IPs, expanding its library to 5,000 games and increasing its user base from 25 million to 40 million, with subscription revenues surpassing $6 billion annually.

The FTC had intervened on antitrust grounds, with the main accusation centered on Microsoft potentially exploiting content control. The concern included the likelihood of Microsoft pulling Activision's flagship Call of Duty series off Sony's PlayStation platform, which would impact PS console sales and subscriptions significantly.

Although the FTC filed its lawsuit in December 2023 to halt the merger and sought an injunction in August, the federal court dismissed these efforts, citing Microsoft's promises to maintain Call of Duty's presence on PlayStation for ten years and offer Activision Blizzard's games to third-party cloud gaming services.

Microsoft's successful completion of regulatory reviews across various jurisdictions, including the EU's approval pending certain conditions, and later resolving objections from the UK's Competition and Markets Authority, underscored the meticulous efforts required to clear global regulatory barriers.

Nevertheless, Microsoft faces integration challenges in the wake of the acquisition, such as declining Activision Blizzard revenues and cultural integration affecting workforce stability. Furthermore, the FTC retains the option to revisit the legal framework of the merger, with hints at possible administrative procedures aimed at shaping future industry standards.