The lawsuit represents the FTC’s most significant effort to rein in consolidation in the tech industry since prominent tech critic Lina Khan (D) became the commission’s chair and was expected to usher in a new era of antitrust enforcement characterized by a willingness to bring cases in court rather than pursue settlements with companies.

The case signals a broader strategy at the agency to bring cases against deals that may pose competitive threats in the future, especially in nascent gaming markets. The lawsuit was issued the same day that a trial began in San Jose, Calif., in an FTC lawsuit against Facebook parent company Meta over its acquisition of the virtual reality company Within. The agency has argued that if the companies could be kept separate, they would push each other to develop more features and attract more users, benefitting competition in the future.

The FTC lawsuit against Microsoft could foil the company’s ambitions to become a heavier hitter in gaming frontiers. Activision is the owner of massively popular titles like “Candy Crush” and “Call of Duty,” and its acquisition could bolster Microsoft in its competition with Japanese console makers Nintendo and Sony.