In an unexpected turn of events, the U.S. Federal Trade Commission (FTC) has reignited its challenge against Microsoft’s $69 billion acquisition of video game giant Activision Blizzard. Despite the deal being close to finalization, the FTC’s decision to resume its in-house trial against the acquisition reveals that the regulatory saga is far from over.

The Timeline: A Legal Rollercoaster

The FTC initially issued a complaint in December 2022, alleging that the acquisition would enable Microsoft to suppress competition in the gaming console and cloud-gaming sectors. However, the case was put on hold over the summer, following a judge’s ruling in San Francisco that the FTC had not sufficiently demonstrated the deal’s threat to competition.

On September 27, 2023, the FTC resumed its administrative case, signaling its intent to continue challenging the acquisition. This move comes after a U.S. appeals court denied the FTC’s bid to pause the deal in July.

Why the Continued Challenge?

“The FTC continues to believe this deal is a threat to competition,” said FTC spokesperson Victoria Graham. The agency is particularly concerned that Microsoft could potentially withhold Activision’s popular games, such as Call of Duty and World of Warcraft, from rival consoles or services. This move would give Microsoft an undue advantage in both the console and cloud-gaming markets, leveraging Activision’s robust gaming portfolio to eliminate competition.

Both Sides of the Coin

Activision and Microsoft remain optimistic despite the regulatory headwinds. “We’re focused on working with Microsoft toward closing. How the FTC uses limited taxpayer dollars is its decision,” said Activision spokesperson Joseph Christinat.

Rebecca Dougherty, a spokesperson for Microsoft, mirrored this sentiment, stating, “We still anticipate that we will close the transaction by October 18, and we have full confidence in our case and the deal’s benefits to gamers and competition.”

Analyst Perspective: A Hail Mary Attempt?

Wedbush Securities analyst Daniel Ives considers the FTC’s renewed efforts as a ‘Hail Mary’ attempt to disrupt the closing of the deal. “The FTC and Lina Khan continue to fight a losing battle, trying to extinguish this deal. We believe it’s a matter of when, not if, the deal gets done,” said Ives.

What’s Next?

The FTC’s in-house hearing is scheduled to begin 21 days after the 9th Circuit U.S. Court of Appeals issues its opinion on the appeal of the district court decision. With UK competition authorities having accepted the latest concessions from Microsoft and Activision, the deal is set to clear its final regulatory hurdle, despite the FTC’s continued opposition.

The Road Ahead

The FTC’s revived complaint adds a new layer of complexity to what is already the largest gaming acquisition deal in U.S. history. While both Microsoft and Activision are confident that the acquisition will proceed as planned, the FTC’s relentless pursuit showcases the heightened scrutiny big tech companies face in today’s regulatory landscape. Whether the FTC’s challenge will have any substantial impact on the deal remains to be seen, but it certainly adds an intriguing chapter to this unfolding corporate drama.