By The Federal Trade Commission sued 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.
In the lawsuit, filed in the U.S. District Court for the Northern District of California, the F.T.C. said the move was necessary because “Microsoft and Activision have represented that they may consummate” the deal. It asked the court to issue an order blocking the acquisition’s closing by the end of the day on Thursday.
The lawsuit is the latest blow to Microsoft’s purchase 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 filed the separate lawsuit because unlike the F.T.C.’s in-house court, a federal court can issue a restraining order to stop a purchase from being completed.
Regulatory hurdles have piled up against the blockbuster deal, which has become a test for whether behemoth tech companies can complete major acquisitions amid backlash to the firms’ growing power. 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.
Microsoft has appealed the British ruling to block the Activision deal and has pledged to fight the F.T.C. in court. The two companies had said they hoped the purchase would close 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, it would also prevent Microsoft from completing the transaction in the United States.
Bill Baer, a former top government antitrust official, said the F.T.C.’s lawsuit was a response to the risk that Microsoft would try and circumvent the British ruling and “cause the injury the F.TC. is worried about” by closing the deal elsewhere.
Victoria Graham, a spokeswoman for the F.T.C., said in a statement that “Microsoft and Activision have not provided assurances” that they would not close the deal.
In a statement, Brad Smith, the president of Microsoft, said the company welcomed the “opportunity to present our case in federal court.”
Bobby Kotick, the chief executive of Activision, said in a note to employees that the company welcomed the news because it “accelerates the legal process.” He added: “We will now have the opportunity to more quickly present the facts about our merger.”
If Microsoft ushers 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.
Lina Khan, the F.T.C. chair, has made blocking corporate deals a cornerstone of her strategy to rein in the tech giants and other big companies. The chip maker Nvidia and the defense contractor Lockheed Martin have dropped proposed deals after they were challenged by the F.T.C. under Ms. Khan.
Attempts to block other deals have been less successful. Last year, the F.T.C. tried to stop Meta from buying Within, a start-up that makes a virtual reality fitness game. A federal judge declined to stop the deal from closing, and the F.T.C. dropped its broader challenge to the purchase.
Microsoft has worked to gain approval from regulators for the Activision acquisition. Since announcing the deal a year and a half ago, the company has embarked on a charm offensive, meeting with regulators around the world and cutting deals with other gaming companies to assuage concerns that the deal would reduce availability of Activision’s games and raise their prices.
But those moves failed to persuade the British and American regulators to approve the deal. The new lawsuit by the F.T.C., analysts said, could be an effort by the United States to regain some prominence in the legal fight, as well as an acknowledgment that Microsoft could close the deal despite Britain’s objections.
“The F.T.C. is reaffirming how adamant it is about blocking this deal,” said Joost van Dreunen, a gaming analyst and professor at New York University. “They want to make sure that they are still driving the bus in this.”
