Microsoft's desire to acquire Activision Blizzard is expected to take a huge blow with the Federal Trade Commission (FTC) "likely" to challenge the $68.7 billion deal.
As Politico reports, three people with knowledge of the matter believe the FTC is going to file an antitrust lawsuit to block the deal going ahead.
The investigation is still ongoing and the four FTC commissioners have yet to meet with lawyers from either company. However, FTC staff who have been compiling information during the investigation, including depositions from key people at Microsoft (Satya Nadella) and Activision Blizzard (Bobby Kotick), are thought to be "skeptical of the companies’ arguments."
The FTC isn't commenting publicly yet, but the main issue is the "unfair boost" Microsoft is expected to receive in the video game market once the deal is done. It's important to remember that Activision Blizzard holds the intellectual property rights for Call of Duty, Crash Bandicoot, Guitar Hero, Tony Hawk's, Spyro, Skylanders, World of Warcraft, StarCraft, Diablo, Hearthstone, Heroes of the Storm, Overwatch, and Candy Crush Saga.
There's little doubt transferring all of that IP to a console maker will give it a boost, but Microsoft has basically been arguing it shouldn't be a reason to block the sale. However, if the FTC does decide to challenge the deal it puts Microsoft in a difficult situation as the UK and EU are already carrying out more detailed investigations with what looks like equal levels of skepticism.
Politico points out that the acquisition has a deadline of July 2023, after which the deal would need to be renegotiated. If the FTC files an administrative lawsuit in the coming weeks, there's some doubt over whether it would be resolved before that deadline passes.