The US Federal Trade Commission (FTC) is likely to file an antitrust lawsuit to block Microsoft’s US$69-billion takeover bid for videogame publisher Activision Blizzard, website Politico reported, citing people familiar with the matter.

A lawsuit challenging the deal is not guaranteed, and the FTC’s four commissioners have yet to vote out a complaint or meet with lawyers for the companies, the report on Wednesday said, adding that the FTC staff reviewing the deal are sceptical of the companies’ arguments.

The FTC did not immediately respond to requests for comment.

“We are committed to continuing to work cooperatively with regulators around the globe to allow the transaction to proceed but won’t hesitate to fight to defend the transaction if required,” an Activision Blizzard spokesman said. Any suggestion that the transaction could lead to anticompetitive effects is “completely absurd”, the spokesman added.

Shares of Activision fell about 2% in extended trading after closing 1% higher.

Microsoft, maker of the Xbox game console, announced in January the deal to buy Activision, the maker of Call of Duty and Candy Crush, in the biggest gaming industry deal in history as global technology giants staked their claims to a virtual future.

Microsoft is betting on the acquisition to help it compete better with videogame leaders Tencent and Sony.

Outside the US

The deal is also facing scrutiny outside the US. The EU opened a full-scale investigation earlier this month. The EU competition enforcer said it would decide by 23 March 2023 whether to clear or block the deal. Britain’s antitrust watchdog in September said it would launch a full-scale probe.

The acquisition could damage the industry if Microsoft refused to give rivals access to Activision’s bestselling games, Britain’s antitrust regulator has said.

The deal has drawn criticism from Sony, maker of the PlayStation console, citing Microsoft’s control of games like Call of Duty.

“Sony, as the industry leader, says it is worried about ‘Call of Duty’, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation,” Microsoft president and vice chairman Brad Smith has said.

Read: Investors fret that Microsoft’s $69-billion Activision deal will fail

A spokesman for Microsoft said: “We are prepared to address the concerns of regulators, including the FTC, and Sony to ensure the deal closes with confidence. We’ll still trail Sony and Tencent in the market after the deal closes, and together Activision and Xbox will benefit gamers and developers and make the industry more competitive.” — Tiyashi Dattaa and Mrinmay Dey, (c) 2022 Reuters