Microsoft-Activision deal under Federal Trade Commission review

The $68.7 billion cheque that Microsoft wrote gaming developer Activision Blizzard last week has been called into question by a Federal Trade Commission (FTC) review.

According to Bloomberg, the FTC will decide whether the proposed acquisition will significantly affect competition.

The person who is said to be close to the matter, but is not authorised to speak publicly told the publication that the investigation will consider how the merger could harm competitors through Activision’s gaming portfolio and Microsoft’s hardware.

Bloomberg’s article reports that the FTC’s chairwoman Lina Khan has a history in scrutinising large tech deals by the biggest tech companies, as organisations seek to dominate across multiple markets.

Two major takeovers that were blocked under Khan’s leadership include Nvidia’s proposed acquisition of Arm for $40 billion and Lockheed Martin’s proposed deal to acquire Aerojet Rocketdyne for $4.6 billion.

The FTC blocked the Nvidia-Arm deal in December 2021 alleging that the acquisition would “stifle innovative next-generation technologies.”

According to a statement by FTC Bureau of Competition Director, Holly Vedova, “Tomorrow’s technologies depend on preserving today’s competitive, cutting-edge chip markets.”

The Lockheed Martin-Aerojet Rocketdyne deal block came as the FTC named the consolidation of “multiple markets critical to national security and defense” as the likely outcome should the deal succeed.

Deals in the gaming sector are quick off the mark this year with the Microsoft-Activision pitch, the Sony-Bungie deal, Savvy Gaming Group’s acquisition of e-sports names ESL and FACEIT, and the Take-Two Interactive-Zynga deal.

Investment banking firm Drake Star Partners told Reuters that the video gaming sector is set to secure $150 billion in deals, financing and IPOs in 2022 as the industry consults new revenue streams.

Michael Metzger, partner at Drake Star told the publication, "We're in the middle of a large number of deals right now and the state continues to stay very hot.”

The organisation named EPIC Games and Discord as companies to watch.