A federal judge on Tuesday ruled against the Federal Trade Commission’s attempt to delay Activision Blizzard’s $70 billion acquisition of Microsoft, setting the stage for the tech giant and the video game publisher to merge as soon as this month.

In a 53-page decision, Judge Jacqueline Scott Corley of the US District Court for the Northern District of California said that the FTC had not shown that it was likely to prove that the merger would result in a substantial reduction in competition that would harm consumers.

She denied the FTC’s request for a preliminary injunction, which would have delayed closing the deal until after the agency could fight it in an internal court.

The ruling is a significant blow to the FTC’s efforts to police rampant technology mergers more aggressively. That strategy is led by the president of the agency, Lina Khan, who has argued that the vast influence of Big Tech over business and communications has led to anti-competitive behavior. The FTC sued Microsoft, Meta and Amazon, but it walked away from one of its cases against Meta and has had little to show for its efforts so far.

Microsoft and Activision cheered the ruling. “We thank the Court in San Francisco for this quick and thorough decision,” wrote Brad Smith, the president of Microsoft on Twitter. Bobby Kotick, Activision’s chief executive, said in a statement that the merger “will enable competition rather than allow entrenched market leaders to continue to dominate.”

Douglas Farr, a spokesman for the FTC, said in a statement that the agency was “disappointed in this outcome because of the clear threat this merger poses to open competition in cloud gaming, subscription services and consoles.” Mr. Farr added that “in the coming days we will announce our next step to continue our fight to preserve competition and protect consumers.”

The ruling ends the temporary ban on closing the deal just before midnight on July 14, unless the FTC obtains an extension from an appeals court.

There were also indications on Tuesday that the tide may be turning in favor of Microsoft in Britain, which presented the other major obstacle to the acquisition. Regulators there blocked the deal, saying it would stifle competition in online streaming games. But on Tuesday, Microsoft said it was dropping its formal appeal of that decision to negotiate a settlement.

The regulator, called the Competition and Markets Authority, said in a statement that it was open to a proposal that would address its concerns, giving Microsoft a major boost to complete its acquisition as soon as next week.

From the start, the FTC appeared to be fighting an uphill battle against Microsoft, which said early last year it would buy Activision to restructure its video game business and bring marquee games like Call of Duty and World of Warcraft to its Xbox. platform

Courts have been concerned that mergers involving direct competitors will harm competition, but Microsoft and Activision are generally not considered direct competitors.

The FTC sued Microsoft in its administrative court last year, but that court does not have the legal authority to prevent the deal from closing. In June, the FTC asked Judge Corley to take that step, saying it feared Microsoft was ready to complete the transaction despite the government’s concerns.

During five days of testimony last month, the FTC called high-profile witnesses such as Mr. Kotick and Satya Nadella, the chief executive of Microsoft, as it argued that the merger would be bad for gamers and for competition.

The FTC argued that Microsoft had significant incentives to make Activision’s Call of Duty—a franchise with more than $30 billion in lifetime revenue—exclusive to the Xbox, withholding it from Sony PlayStation or downgrading PlayStation versions of the game.

But Microsoft said it has signed deals with companies like Nintendo to offer Call of Duty on other platforms, and has also offered Sony a deal. Microsoft argued that it would have no incentive to risk angering players by reneging on its commitments to keep Call of Duty on PlayStation, and that it would lose a significant amount of revenue by cutting off PlayStation players.

At times, Judge Corley seemed skeptical of the FTC’s case. During closing arguments, she pressed the agency several times to support her claim that if Call of Duty were retained by PlayStation, enough players would leave PlayStation for Xbox to make the move worthwhile for Microsoft.

“The FTC has not shown that it is likely to succeed on its claim that the combined company is likely to pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the subscription video game library and cloud game marketplaces,” Judge Corley wrote in her decision.

“On the contrary,” she added later, “the record evidence points to more consumer access to Call of Duty and other Activision content.”

She wrote that despite “extensive discovery,” including close to one million documents and 30 depositions, the FTC “has not identified a single document that contradicts Microsoft’s publicly stated commitment to make Call of Duty available on PlayStation (and Nintendo Switch). “

Her denial of a preliminary injunction means Microsoft could complete its merger with Activision as soon as this month in the US. The companies have set a July 18 deadline for the deal, with Microsoft required to pay Activision a $3 billion breakup fee if the deal doesn’t go through by then. The companies could agree to postpone that date, or they could merge while their appeal in the UK is pending.

It was the FTC’s latest loss in a case involving one of the tech giants. While legal challenges under Ms Khan caused companies such as Lockheed Martin and chip maker Nvidia to abandon proposed acquisitions early in her tenure, the agency failed this year to challenge Meta’s purchase of virtual reality startup.

Ms Khan said she would not be deterred by courtroom losses. The chair and her allies believe regulators have been too risk averse for years, leading to rampant corporate consolidation. They said the FTC and other government agencies should be willing to pursue new cases even if they are not guaranteed wins.

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