You'd be forgiven for assuming Microsoft acquiring Activision Blizzard was a sure thing, but it has to pass a regulatory review first, and the fate of the deal now sits in the hands of the Federal Trade Commission.
As Bloomberg reports, such reviews are usually carried out by the FTC or the Justice Department. According to a person familiar with the matter, the FTC is going to handle this $68.7 billion deal Microsoft hopes to have completed before June 30, 2023.
The FTC will assess whether Activision Blizzard becoming a part of Microsoft harms competition to the extent where it can't allow it to proceed. Anyone thinking the commission will go easy on Microsoft should think again. Under FTC Chair Lina Khan, the commission has recently blocked Nvidia's acquisition of ARM Ltd. and Lockheed Martin's acquisition of Aerojet Rocketdyne Holdings Inc. In the case of ARM, the FTC filed a law enforcement action in order to "preserve competition." For the Aerojet deal, the FTC found Lockheed would use its control to "harm rival defense contractors."
Yesterday, Sony may have done Microsoft a favor by announcing its intention to acquire developer Bungie for $3.6 billion. One of the key elements of the FTC's review will be whether Microsoft owning Activision limits access to the company's products by rivals and the impact that will have on their ability to compete. The FTC won't fail to notice Sony is effectively doing the same thing, albeit on a much smaller scale.
Microsoft has also stated Activision games such as Call of Duty will remain on PlayStation after the acquisition is complete. That decision may help Microsoft's cause, but it's countered by Microsoft also stating future Bethesda games won't be available on Sony's platforms, suggesting the same could happen to Activision-controlled titles eventually.