The Federal Trade Commission has moved to formally halt Microsoft's acquisition of Activision Blizzard, saying that Microsoft has a record of "acquiring and using valuable game content to suppress competition from rival consoles."

"Microsoft has already shown that it can and will withhold content from its gaming rivals," FTC Competition Bureau Director Holly Vedova said in an announcement today (opens in new tab). Today, we are seeking to stop Microsoft from seizing control of top-tier independent game studios and using them to stifle competition in multiple dynamic and rapidly growing gaming markets."

A major bottleneck in Microsoft's planned acquisition of Activision Blizzard is the "Call of Duty" series: Sony is concerned that Microsoft is trying to draw customers away from the PlayStation consoles by making this game an Xbox The company is strongly opposed to this acquisition due to concerns that Microsoft will make the games exclusive to the console. Microsoft has repeatedly denied any such intention, and in November made a formal offer to guarantee Call of Duty on PlayStation consoles for at least 10 years (opens in new tab).

The FTC, however, was apparently unconvinced, pointing to Microsoft's acquisition of Bethesda Softworks in 2021 (opens in new tab) as evidence of the company's intention to exclusively sell major games. In a press release, he noted that two of Bethesda's upcoming games, Starfield (opens in new tab) and Redfall (opens in new tab), "have been assured by (Microsoft) to European antitrust authorities that there is no incentive to take the games off rival consoles despite the fact that they were" both Xbox console exclusives.

The FTC described Activision Blizzard as "one of the few top-tier video game developers in the world that produces and publishes high-quality video games for multiple devices" and has produced not only the "Call of Duty" series but also "World of Warcraft," "Diablo and Overwatch, among others. The company's games have 154 million monthly active users worldwide across all devices. However, the FTC warns that if Microsoft takes control of the company, its multiplatform strategy could change.

"By taking control of Activision's blockbuster franchises, Microsoft could manipulate Activision's prices, degrade Activision's game quality and player experience on rival consoles and game services, change the terms of access to Activision content or timing, or by shutting out content from competitors altogether, it would have the means and incentive to undermine competition and harm consumers," the FTC said.

To be clear, the FTC's complaint does not end the proposed merger: the complaint "marks the beginning of proceedings that will result in a formal hearing before an administrative law judge," meaning Microsoft still has an opportunity to assert its claims and close the deal. . means that Microsoft still has the opportunity to assert its claims and complete the transaction.

In response to the FTC's complaint, Microsoft President Brad Smith said in a statement shared on Twitter that the company "continues to believe this deal will increase competition and bring more opportunities to gamers and game developers."

"We have been working from day one to address competitive concerns, including presenting proposed concessions to the FTC earlier this week," Smith said.

"While we believe in giving peace a chance, we have full confidence in our case and welcome the opportunity to present our case in court."

The FTC's lawsuit comes less than 48 hours after Xbox boss Phil Spencer announced a 10-year deal with Nintendo and Steam (open in new tab) to continue offering the Call of Duty series on those platforms.

While it would be nice to see the series remain on the PC, it was never in doubt: Microsoft has not been at odds with Steam since the days of Games for Windows Live, and the FTC has noted that Microsoft's Xbox console is "one of only two of high-performance video game consoles," it noted. The other, of course, is Sony's PlayStation, which is why Microsoft is actually competing with it and why it is "exclusive" only in the sense that games like Starfield are excluded from the PlayStation.

It is unclear how the FTC's action will ultimately affect the deal; according to Axios, the FTC has not filed an injunction against the acquisition, which may indicate that the deal is likely to go through anyway. It is possible that the need for an injunction has disappeared because the process can proceed more quickly through the FTC's administrative courts than through the federal courts, but it is also possible that the FTC expects the acquisition to eventually close and is simply registering an objection on the record.

In any case, the news that Microsoft's historic acquisition of Activision Blizzard may prove to be an uphill battle casts a bit of a shadow over the announcements that will be made by both companies at tonight's gaming awards.