Microsoft’s $70 billion deal with Activision under regulatory review

The Federal Trade Commission hasn’t exactly been squeamish about acquisitions and such mega-sums lately. Microsoft’s nearly $70 billion acquisition of Activision Blizzard has caused a lot of discussion; after all, it is a record amount. Now the deal is to be reviewed by the FTC under antitrust law.

Lina Khan takes action against tech giants

The goal of the U.S. Federal Trade Commission is to assess whether the purchase will affect competition in the gaming industry. The Department of Justice and the FTC share responsibility for reviewing antitrust matters and usually agree among themselves which government agency will investigate each lawsuit. The deal is expected to be scrutinized very closely because Trade Commission Chairwoman Lina Khan has made it her mission to scrutinize large tech companies more rigorously.

What makes this particularly interesting is that Lina Khan is a well-known critic of tech giants and corporate consolidation. Khan has previously advocated for stricter oversight and regulation of large tech giants like Apple, Facebook, Amazon and Google. After Khan became the new FTC chair, both Amazon and Facebook filed petitions to prevent Lina Khan from investigating these companies.

Under Khan’s leadership, the FTC has already brought down two major deals involving technology companies. Nvidia Corp. recently had its business deal with Arm Ltd. fall through after regulators from several countries scrutinized the deal. Lockheed Martin’s purchase of Aerojet is also on shaky ground after Khan announced it would file a lawsuit challenging the deal.

A threat of monopolization?

The current investigation is designed to put Microsoft under the microscope to determine whether the purchase could hurt competition in the gaming industry and whether it could lead to a monopoly. Because that’s what it’s looking more and more like lately. The head of Xbox, Phil Spencer announced immediately after the deal was announced that he has no plans to recall the games from other platforms. He also said that there are certain agreements that the next three Call of Duty games will be on PlayStation.

However, it is not clear what the situation is with the other games. If Microsoft can prove to regulators that the Activision Blizzard purchase will not hinder the general market and competition, the deal will be approved. If not, it won’t get done, or at least not the way it looks now. If the deal goes through, the purchase will likely go through in the summer. Before the deal can close, however, it will be subject to regulatory review not only in the U.S., but in other countries as well.