U.S. Federal Trade Commission (FTC)
In the United States, the acquisition was reviewed by the Federal Trade Commission (FTC) rather than traditionally by the U.S. Department of Justice, as the agency had raised more concerns over mergers and acquisitions in the Big Tech sector in the last decade.[61] U.S. Senators Elizabeth Warren, Bernie Sanders, Sheldon Whitehouse, and Cory Booker expressed their concerns about the merger to the FTC as part of the FTC's investigation, saying that both companies have "failed to protect the rights and dignity of their workers" and that the merger should be opposed if "the transaction is likely to enhance monopoly power and worsen the negotiating position between workers and the parties."[62] The FTC formally stated its intention to block the acquisition as proposed on December 8, 2022. The FTC expressed concern that the acquisition would harm consumers of Activision Blizzard's games and give Microsoft too much control of certain parts of the industry, such as cloud gaming. The FTC also pointed to the acquisition of Zenimax, which the FTC claimed that Microsoft had agreed to a concession from the European Union to not make their games exclusive to the Xbox and later broke.[63][64] In a statement made to Axios' Stephan Totilo, the European Commission stated that they had cleared Microsoft's acquisition of Zenimax unconditionally as they saw no "material impact" on the gaming market even if Microsoft made Zenimax's titles exclusive.[65]
Microsoft responded to the FTC's complaint that Sony itself is one of the largest platforms with exclusive titles that contractually cannot be made for Xbox. They also said they still plan to offer content for multiplayer Bethesda games like Elder Scrolls Online and Fallout 76 for all platforms to avoid undercutting the playerbase. Microsoft also initially challenged the constitutionality of the FTC due to the ability for the Commissioner to be removed by the President at will, and their use of administrative law judges to initially review cases, both which have founding in recent Supreme Court cases,[66] but removed this language in an amended response, sticking to the video game market.[67] In February 2023, the FTC denied a request by Sony to drop a subpoena filed by Microsoft, requesting internal documentation from Sony related to their third-party exclusivity deals.[68] The FTC requested a temporary restraining order and a preliminary injunction to block the merger on June 12, 2023. The FTC stated that Microsoft and Activision Blizzard "have represented in the past that they cannot close their deal due to antitrust reviews of the transaction in other jurisdictions. But Microsoft and Activision have not provided assurances that they will maintain that position."[69]
The court granted the temporary restraining order on June 13, 2023,[70] while a hearing to determine if a preliminary injunction on the deal should be granted was held from June 22 to 30, 2023, before Judge Jacqueline Scott Corley. Microsoft said that if the injunction should be granted, they may consider abandoning the deal which they described as being a "three-year administrative nightmare".[71] During the hearing, the FTC was focused on the effect of Call of Duty in the competitive market, console exclusivity, and the impact of the nascent cloud gaming field.[72]
Judge Corley denied to apply a permanent injunction on July 11, 2023, lifting the temporary restraining order to allow Microsoft to proceed to close the deal, though the case will continue to trial later. Corley wrote, "For the reasons explained, the Court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition. To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content."[73] The FTC formally filed an appeal to Judge Corley's denial to the Court of Appeals for the Ninth Circuit on July 12, 2023.[74] The FTC also filed a separate motion to Corley on July 13 arguing for another injunction until the Ninth Circuit had time to decide to stay Corley's previous ruling, but she denied that motion.[75] The Ninth Circuit court denied the emergency appeal to block the merger on July 14, 2023.[76]
The FTC formally withdrew its challenge to the acquisition on July 20, 2023, though they have announced their intent to refile at a later time.[77] The FTC reopened its case against the merger on September 27, 2023, though was unable to block the merger from occurring.[78]
In its first filings after the completion of the acquisition, in February 2024, the FTC argued that the 1,900 job cuts made in January 2024 went against assurances that Microsoft had made in their previous documents, arguing for final completion of the deal to be paused while their new complaint was considered. While Microsoft had stated that the job cuts were in areas of overlap between the companies, the FTC stated this action was "inconsistent with Microsoft's suggestion to this court that the two companies will operate independently post-merger".[79] The FTC further amended its case in July 2024, following Microsoft's announcement of rate increases for Game Pass and the creation of a low-cost tier that removed day-one access to games. The FTC said the move was inconsistent with the assurances Microsoft gave the court prior to acquisition, and considered the new tier a "degraded product" that, along with price increases, harmed consumers.[80]
The Ninth Circuit denied the FTC's appeal in early May 2025, leading to the FTC dropping the case by May 22, 2025.[81]
European Commission
After receiving a formal notification by Microsoft on September 30, 2022, the European Commission (EC) began its first phase review of the acquisition under the EU merger law.[82][83] The Commission sent out a questionnaire to several game industry firms to ask them about the potential impact of the acquisition on their livelihood, including if Microsoft does opt to lock rivals out of Activision games in the future.[84] The Commission announced on November 8, 2022, that it would conduct an additional review of the merger "to ensure that the gaming ecosystem remains vibrant to the benefit of users in a sector that is evolving at a fast pace."[85]
The EC filed its formal complaint against the acquisition on February 3, 2023. The EC said they considered that Microsoft may be "incentivized to block access to Activision's popular Call of Duty franchise," which could lead to "reduce competition in the markets for the distribution of console and PC video games, leading to higher prices, lower quality and less innovation for console game distributors, which may, in turn, be passed on to consumers."[86]
UK Competition and Markets Authority
The UK's Competition and Markets Authority (CMA) stated its intent to perform a higher-level review of the acquisition in August 2022. The phase 1 ruling, issued on September 1, 2022, said that the merger "may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom".[90] Preliminary findings of phase 2 of the investigation was reported on February 8, 2023, concluding that the acquisition "could result in higher prices, fewer choices, and less innovation for UK gamers", as well as less competition in the console and cloud gaming spaces. The CMA has recommended that Activision should at least divest the Call of Duty franchise.[91] However, following Microsoft's commitments to ensure the release of Call of Duty on multiple platforms for ten years, in association with meeting other regulatory bodies, the CMA changed its stance by late March 2023. In its new statement, the CMA said "While the CMA's original analysis indicated that this strategy would be profitable under most scenarios, new data (which provides better insight into the actual purchasing behaviour of CoD gamers) indicates that this strategy would be significantly loss-making under any plausible scenario."[92]
The CMA formally ruled against the merger on April 26, 2023. Among various reasons, CMA stated that Microsoft had already a strong position in cloud gaming, and the merger would only strengthen that position.
Others
The U.S. Securities and Exchange Commission (SEC) reviewed potential claims that investors close to Kotick engaged in insider trading prior to the acquisition announcement.[107] Activision Blizzard said they would fully cooperate with the SEC's review.[108] South Africa's Competition Commission approved the merger in April 2023.[109]
The deal is also seeing review in Australia, New Zealand, and elsewhere.[110][111] In December 2022, Chile's regulatory authority (Fiscalia Nacional Economica) voted to approve the deal in Phase 1.[112] The Japan Fair Trade Commission had also given approval for the merger by March 2023.
Legal challenges
The New York City Employees' Retirement System, which are shareholders of Activision Blizzard, sued the company in April 2022, arguing that the company had made the acquisition deal quickly with Microsoft as to try to cover up the misdoings of Kotick that had been uncovered as part of the ongoing DCEH lawsuit and escape any liability.[117]
Sjunde AP-Fonden, a Swedish-government run pension fund with investments in Activision-Blizzard, filed a lawsuit in November 2022 within the U.S. court system against Microsoft and Activision-Blizzard of collusion in establishing the deal. The lawsuit asserts that because of Activision-Blizzard's weakened position resulting from the workplace harassment lawsuit from the California DFEH, that Microsoft negotiated with Kotick and Activision-Blizzard to buy the company at a reduced price. The lawsuit also named Kotick for using the deal to cover up his alleged misconduct related to the DFEH suit.[118]
A group of gamers filed suit against Microsoft in December 2022 to block the merger under the Clayton Antitrust Act of 1914 which enables consumers to file such lawsuits. The suit argues that should the merger go through, Microsoft's combined power would disrupt the video game marketplace, giving Microsoft the capability to outpace competitors and take a stronger hold.[119] Microsoft failed to have the case dismissed in January 2023, and arguments related to a preliminary discussion was presented to the judge in March 2023.
