Microsoft’s $69 billion takeover of Activision Blizzard has been temporarily blocked by a judge following a request by US regulators. 

The court issued a temporary restraining order to maintain the status quo during the pending complaint. The US Federal Trade Commission (FTC) expressed concerns that the deal would significantly reduce competition in the industry. 

A two-day hearing is scheduled to take place in San Francisco from June 22.

The potential acquisition of Activision Blizzard, known for popular games such as Call of Duty and Candy Crush, is the largest in the history of the video games sector. 

Regulators in the UK, US, and Europe have had differing views on the deal. The UK blocked the buyout, while the European Union approved it. 

To proceed with the acquisition, Microsoft and Activision must obtain approval from regulators in all three regions.

The FTC argued that the deal would grant Microsoft’s Xbox console exclusive access to Activision games, leaving competitors Nintendo and Sony at a disadvantage. 

For a decade, Microsoft has offered a legally binding agreement to provide Call of Duty games to rivals, including Sony. In response, the European Commission approved the acquisition, stating that Microsoft’s offer of 10-year free licensing deals ensures fair competition in the market.

However, the UK’s Competition and Markets Authority (CMA) rejected the deal, citing concerns about reduced innovation and limited choice for gamers. 

Microsoft and Activision expressed their intention to appeal the CMA’s decision. Microsoft president Brad Smith called it the company’s ‘darkest day’ in its British operations.

Microsoft welcomes the opportunity to present its case in federal court in response to the FTC’s announcement. 

The company believes that expediting the legal process in the US will lead to increased choice and competition in the market.

This acquisition is crucial for Microsoft as it seeks to catch up with its main competitor, Sony. The company views its Xbox Game Pass service, described as the ‘Netflix of games,’ as the future of the industry. 

Microsoft believes that subscription-based access to game libraries and cloud gaming will replace traditional one-time purchases as the primary way of playing games.