The Federal Trade Commission plans to sue Microsoft on Monday to stop the company from closing its $69 billion purchase of the video game powerhouse Activision Blizzard, escalating the federal government’s efforts to stymie the largest consumer technology deal in decades, two people with knowledge of the matter said.
The planned lawsuit would be the latest blow to Microsoft’s acquisition of Activision, which makes popular video games like Call of Duty and Candy Crush. Last year, the F.T.C. sued to block the deal through an in-house court, arguing it would damage competition in various parts of the video game market. The agency plans to file the separate lawsuit on Wednesday because unlike the F.T.C.’s in-house court, a federal court can issue a restraining order to block a purchase from being completed.
Regulatory hurdles have piled up against the blockbuster deal, which has become a test case for whether behemoth tech companies can complete major acquisitions amid backlash to the growing power of the firms. In April, the British Competition and Markets Authority also moved to stop the deal, though regulators in the European Union said in May that it could go forward.
Governments around the world have been challenging the power of tech giants like Microsoft. The F.T.C. has accused Meta, Facebook’s parent company, of shutting off nascent competitors and has been investigating whether Amazon ran afoul of antitrust laws. The Department of Justice has filed multiple lawsuits arguing that Google has committed antitrust violations of its own.
An F.T.C. spokesman did not immediately respond to a request for comment on the planned lawsuit to stop Microsoft from closing the Activision purchase. MLex, a regulatory news outlet, earlier reported the F.T.C.’s plans.
In a statement, Brad Smith, the president of Microsoft, said the company welcomed the “opportunity to present our case in federal court.”
Microsoft has appealed the British ruling to block the Activision deal and has pledged to fight the F.T.C. in court. But the legal challenges could significantly delay the closing of the deal, which the two companies had said they hoped would occur by July.
The British portions of the deal cannot close while Microsoft’s appeal moves forward. If a federal court grants the F.T.C.’s demand to stop the deal from closing, it would also prevent Microsoft from completing the transaction in the United States.
But if Microsoft does usher the deal through, it would be a monumental moment for the $184 billion gaming industry. Microsoft earns billions of dollars each year in the video game business, but competitors like Nintendo and Sony — which makes the PlayStation console — have long been considered to have a better catalog of games that attract players to their devices. Adding Activision and its slate of gaming studios to Microsoft’s Xbox consoles and its games subscription service could even the playing field.
This is a developing news story and will be updated.