The US goverment has moved to block Microsoft's $69 billion bid to buy "Call of Duty" maker Activision Blizzard.

It has thrown a stumbling block in front of the tech giant's plans to rapidly expand its portfolio of popular games and catch up to bigger rivals.

Microsoft, which owns the Xbox console and game network platform, said in January 2022 that it would buy Activision for $68.7 billion in the biggest gaming industry deal in history.

Without Activision and its variety of games across mobile, consoles and PCs, Microsoft could struggle to attract users to its budding subscription service for accessing games.

Drawing subscribers has become a priority for big tech companies as traditional growth sources such as ad sales become less reliable.

The US software company had said it wanted the deal to help it compete with gaming leaders Tencent and PlayStation owner Sony, which has criticised the deal.

But, in its complaint, the US Federal Trade Commission, which enforces competition law, said that Microsoft had a record of hoarding valuable gaming content.

"Microsoft has already shown that it can and will withhold content from its gaming rivals," said Holly Vedova, director of the FTC's Bureau of Competition

"Today, we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets," she added.

The agency set a hearing before an administrative law judge for August 2023.

Microsoft President Brad Smith said the company would fight the FTC.

"While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court," he said.

The Biden administration has taken a more aggressive approach to antitrust enforcement.

The US Department of Justice recently stopped a $2.2 billion merger of Penguin Random House, the world's largest book publisher, and smaller US rival Simon & Schuster.

The FTC said that its concern was that Activision's popular games, including "World of Warcraft" and "Diablo," would not continue to be offered on a range of consoles, PCs and mobile devices.

While Microsoft has suggested concessions to address competition concerns, the rapid pace of change in the tech and gaming industries could make those conditions useless over time.

To woo regulators, shortly after the deal was announced Microsoft unveiled a new set of principles for its app store, including open access to developers who meet privacy and security standards.

This month, in another move to blunt criticism, Microsoft entered into a 10-year commitment to offer "Call of Duty," the popular first-person shooter series, to Nintendo platforms. Microsoft made the same offer to Sony.

Activision Blizzard CEO Bobby Kotick told employees he was confident that the deal would go forward.

"The allegation that this deal is anti-competitive doesn't align with the facts, and we believe we'll win this challenge," he told employees.

He said that he believed the companies' arguments would win "despite a regulatory environment focused on ideology and misconceptions about the tech industry."

The deal also faces regulatory headwinds in Europe.

As of late November, Microsoft was expected to offer remedies to EU antitrust regulators in the coming weeks to stave off formal objections to the deal, people familiar with the matter said.

The deadline for the European Commission to set out a formal list of competition concerns, known as a statement of objection, is in January.