Can the US Federal Trade Commission block Microsoft's acquisition of Activision Blizzard?

Microsoft's potential acquisition of Activision Blizzard will now be reviewed by the United States Federal Trade Commission, which has left some of the community confused.

The mega acquisition deal with Activision Blizzard will be the largest ever in the gaming industry's history. Valued at a little less than $70 billion, the sale is scheduled to be completed in the middle of 2023. But parts of the community have been left in the dark, with recent reports by the Federal Trade Commission (FTC) revealing plans to review the acquisition.

When the acquisition gets over, Microsoft will own Activision, Blizzard, and King. Microsoft will possess the entire set of studios and all IPs directly, but one big question does arise. Will the FTC be able to block the move on the grounds of antitrust law?

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FTC blocking Microsoft's acquisition seems highly unlikely

The FTC has blocked deals in the past, citing breaching of antitrust laws. The most high-profile case appears to be of it suing NVIDIA over a potential acquisition of mobile chipmaker Arm.

However, the principal investigation into the case was done in the UK over security concerns. While the deal between NVIDIA and Arm seems unlikely now, it's unclear what the exact reason is.

The FTC could restrict mergers or acquisitions if it feels there is a potential chance of unhealthy power consolidation. The investigation into Microsoft's acquisition is primarily routine to an extent.

There's a certain value threshold beyond which every major deal is reviewed as per routine. The deal in question is no different, and the crucial area to discuss will be if the acquisition will create a toxic monopoly?

While it's hard to predict the future, there are no indications that Microsoft will make Call of Duty titles exclusive on Xbox and PC. There are already three potential titles in the making, and Xbox chief Phil Spencer has promised to honor the existing contracts.

Now, what if Call of Duty goes Xbox exclusive in the future? It will be a significant loss for Sony as COD titles have been major moneymakers for PlayStation. The games regularly feature among the platform's top sellers list, and it will be a big loss.

However, Sony has enough IPs of their own to make up for that. It has acquired Bungie, which brings with it the Destiny IPs.

In terms of trade volumes, Xbox will still be behind Tencent and Sony in terms of valuation after the acquisition. This is based on Xbox Wire's post on the day the acquisition was announced. To say that the purchase will result in power consolidation doesn't make any sense in terms of trade volumes.

As pointed out by reliable insider Tom Henderson, there are similarities between this review and NVIDIA. But the main point of the contest, in that case, was just how big Arm is in the mobile sector, with a major bulk of the chips coming from them.

There was also the issue of national security raised by the UK-based investigation.

There really doesn't seem to be any such case here. Disney's acquisition of Fox was a much bigger horizontal acquisition which had a bigger scope for a red flag in terms of fair practices.

While it's best to wait for the official verdict, it is implausible that Microsoft's acquisition of Activision Blizzard will be flagged for breaching antitrust law.