After five days of intense testimony, a California judge has granted Microsoft permission to proceed with its acquisition of Activision Blizzard. Judge Jacqueline Scott Corley has chosen to reject the Federal Trade Commission’s (FTC) request for a preliminary injunction, allowing the deal to move forward. While Microsoft still faces an ongoing antitrust case by the FTC, this ruling marks a significant step in the company’s favor.

Microsoft’s acquisition of Activision has been described as the largest in tech history. It deserves scrutiny. That scrutiny has paid off: Microsoft has committed in writing, in public, and in court to keep Call of Duty on PlayStation for 10 years on parity with Xbox. It made an agreement with Nintendo to bring Call of Duty to Switch. And it entered several agreements to for the first time bring Activision’s content to several cloud gaming services. This Court’s responsibility in this case is narrow. It is to decide if, notwithstanding these current circumstances, the merger should be halted—perhaps even terminated—pending resolution of the FTC administrative action. For the reasons explained, the Court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition. To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content. The motion for a preliminary injunction is therefore DENIED.

Jacqueline Scott Corley is a United States district judge of the United States District Court for the Northern District of California.

In her ruling, Judge Corley expressed her support for Microsoft’s commitment to preserving the accessibility of the popular gaming franchise, Call of Duty, on platforms like PlayStation and even extending it to Nintendo Switch and GeForce Now. The court acknowledged the validity of Microsoft’s cloud agreements, which the FTC had challenged. Furthermore, while the court recognized the FTC’s position that the Nintendo Switch might not fall under the console market, it agreed with Microsoft’s contention that it should be included. Notably, the court also affirmed that PCs are not part of the console market, aligning with the FTC’s argument on this point.

Following the judge’s decision, Microsoft President Brad Smith expressed gratitude to the court and hoped for similar resolutions in other jurisdictions. Xbox Head Phil Spencer, who played a pivotal role as a witness during the trial, echoed this sentiment on Twitter, emphasizing that the evidence presented supported the benefits of the Activision Blizzard deal for the industry.

Activision Blizzard CEO Bobby Kotick also responded to the ruling, highlighting the benefits the merger will bring to consumers and workers. He emphasized the potential for increased competition and the reduction of dominance by entrenched market leaders in the rapidly growing gaming industry.

The FTC spokesperson, Douglas Farrar, expressed disappointment with the outcome and emphasized the perceived threat the merger poses to open competition in cloud gaming, subscription services, and consoles. Farrar announced that the FTC would soon reveal its next course of action in the ongoing fight to preserve competition and protect consumers.

With the judge’s ruling, Microsoft can now proceed with its Activision Blizzard acquisition ahead of the July 18th deadline. However, this will only be possible if the company chooses to close the deal excluding the UK, or if the Competition and Markets Authority (CMA) agrees to negotiate a suitable remedy. In April, the UK regulator moved to block Microsoft’s proposed acquisition, and the company is currently appealing that decision. A hearing for the appeal is set to begin on July 28th.

Last month, MLex reported that Microsoft was exploring alternative options to complete the deal despite the UK block. This development, in part, triggered the FTC’s request for an injunction. The CMA also filed a request to delay Microsoft’s appeal during the FTC v. Microsoft hearing. However, the Competition Appeal Tribunal (CAT) rejected this request, citing concerns of injustice and unfairness.

Shortly after Judge Corley’s decision, both Microsoft and the CMA agreed to pause their legal battle in the UK to negotiate potential modifications to address the CMA’s concerns regarding cloud gaming. The approval of this pause by the CAT is still pending, but it appears that all parties involved are inclined to reach a solution in the UK.

In May, European regulators gave the green light to the deal, allowing Microsoft to proceed without the UK and without facing a US injunction. However, such a scenario is complex, and both Microsoft and the CMA are actively working to avoid it.

The FTC has the opportunity to appeal Judge Corley’s decision until July 14th at 11:59 pm PT. Nevertheless, considering the regulator’s decision not to appeal a court’s ruling permitting Meta’s acquisition of Within, it is possible that the FTC may abandon its case against Microsoft and Activision Blizzard.

If the court order remains unchanged, this would be the second significant setback for FTC Chair Lina Khan in her pursuit of Big Tech companies since assuming her role as the head of the agency in 2021.