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US competition regulator "likely" to challenge Microsoft-Activision deal

UPDATE: Activision "won't hesitate to fight to defend the transaction."

UPDATE 3pm UK time: Activision Blizzard exec Lulu Cheng Meservey has hit back at yesterday's report which suggested the FTC will "fight" to challenge Microsoft's deal.

Making a statement on Twitter, Meservey said any notion the deal would be anticompetitive is "absurd" and that the "merger will benefit gamers and the US gaming industry - especially as we face stiffer competition from abroad".

This could be referring to moves made by Sweden's Embracer Group and China's Tencent to acquire more studios and IPs.

ORIGINAL STORY 12.30pm UK time: The US' Federal Trade Commission is "likely" to file an antitrust lawsuit against Microsoft's proposed acquisition of Activision Blizzard.

The report from Politico suggests that while a lawsuit is not guaranteed, and that the FTC's four commissioners have yet to vote on the deal or meet with the two company's lawyers, FTC staff members are "sceptical" of the companies' arguments.

A decision on whether to take the deal to court could be decided as early as next month.

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The FTC's concerns are similar to those of the UK's Competition and Markets Authority, citing the possibility of the acquisition giving Microsoft "an unfair boost in the video game market."

Since the appointment of Lina Khan as chair of the FTC by President Biden, the regulator has increasingly sought to crackdown on the dominance of America's largest technology companies. Lina Khan is best known her essay on the "Amazon's Antitrust Paradox," which she wrote while a student at Yale Law School. In the paper, Khan is critical of the FTC's previous failure to rein in large technology companies.

Back on our side of the pond, the CMA has published redacted comments from both Microsoft and Sony concerning the deal, in which Microsoft admitted Sony has more exclusive games that are "better quality" than its own.

The redacted documents also revealed that Sony doesn't expect its next-generation PlayStation to arrive until at least 2027.

Sony's comments also took a dunk on Electronic Arts' Battlefield series, stating the franchise "cannot keep up" with Activision's Call of Duty.