The Sony Playstation division who are struggling to hold on to market share under threat from PC gaming, have been accused of trying to nobble the Microsoft Activision Blizzard deal despite initially agreeing to the proposed merger.

As the US antitrust investigation gets under way into the deal, Microsoft has painted rival Sony as the main agitator behind regulatory moves to block the US $75bn deal.

The court has been told that a top Sony executive initially dismissed the idea that the deal could lead to anti-competitive behaviour.

Then out of the blue Sony, who has a questionable reputation in Australia, reversed course and became the “complainer-in-chief” against the deal according to Microsoft lawyers.

During five days of hearings this week and next, the FTC is seeking an injunction to block the merger.

If the FTC is successful, Microsoft has said it might walk away from the deal altogether. The stakes are extremely high.

Ironically, Sony has emerged as one of the only companies opposing Microsoft’s deal, it’s also been revealed that Sony was the organisation offering up documents, depositions, and much more to the FTC, European Commission, and the UK’s Competition and Markets Authority (CMA).

Microsoft and Sony have basically had a monopoly in the console gaming market with now realising that software is key to the future growth of gaming across multiple platforms.

The bitter clash between the two console gaming giants marks the first time Microsoft has faced off against the US over an antitrust case since the Department of Justice accused it of using illegal means to maintain its PC monopoly in the 1990s.

A court went on to order a break-up of the company in 2000, though the order was overturned on appeal and the case was later settled.

Opening the caser FTC lawyer James Weingarten claimed that Microsoft would have “the ability and incentive” to harm competition after the deal by withholding some of Activision’s games from competitors or by raising prices or degrading the content in a way that made the games less attractive on rival platforms.

Microsoft has denied this.

He said the agency would present “a lot of evidence” during the hearing about how Microsoft had reneged on a promise not to withhold games after the similar acquisition of gaming company ZeniMax.

The potential for Microsoft to withhold Call of Duty, Activision’s most popular game, from Sony’s PlayStation has become a central issue in the case.

Lawyers for Activision claim that the financial model for the deal that Microsoft had presented to its board turned on continuing to make the game available on PlayStation, and that it would hurt customers of its own Xbox console if they could not play against people on the Sony console.

Microsoft said in a court filing last week that it offered Sony a 10-year licence to Activision games and claims the Japanese company rejected the offer in an attempt to kill the acquisition.

The Court was read an email written by Jim Ryan, head of Sony Interactive Entertainment, saying that Microsoft’s planned acquisition “is not an exclusivity play at all,” adding: “I’m pretty sure we’ll see CoD on PlayStation for many years to come.”

Sony have suddenly refused to comment on the content of the email.

The Verge claims that if the FTC fails to get this injunction, Microsoft will likely have already closed the deal by then — and the FTC will face an uphill battle to unwind the merger and may simply walk away.

Conversely, if it succeeds, Microsoft will miss the deal’s July 18th deadline, forcing it to renegotiate its terms with Activision Blizzard and reset the closing date. In practice, Microsoft would likely be forced to walk away from this deal and pay $3 billion in breakup fees to Activision Blizzard.

“The injunction sought by the FTC would thus almost certainly scuttle the transaction,” says Microsoft in its opposition filing to this preliminary injunction hearing. Microsoft argues there’s no need for an injunction because “the FTC could obtain effective relief at the end of the administrative process if it prevailed.” That effective relief could involve forcing Microsoft to sell off Activision Blizzard.

An 18-month deadline for Microsoft to complete the purchase expires on July 18, adding to the pressure to close the transaction before the FTC’s administrative law case begins.

The chief executives of Microsoft, Satya Nadella, and Activision’s Bobby Kotick are among the witnesses scheduled to appear in person at the five-day hearing.