Microsoft's $69 billion bid to acquire Activision Blizzard can go ahead, after the US regulator was denied an injunction to block the deal.
The FTC was seeking to temporarily block the deal ahead of its case to prevent the acquisition entirely, which is currently scheduled for August.
The decision by Judge Jacqueline Scott Corley means Microsoft can close its deal ahead of its July 18 deadline. If the firm had missed the deadline, it was liable to pay a fee to Activision Blizzard.
Currently, the deal has been blocked by the UK regulator the CMA.
The FTC said in a statement that it feels the merger is a clear threat to competition in cloud gaming, subscription services and consoles, and it will announce its next steps to fight against the deal in the coming days.
Meanwhile, Activision Blizzard CEO Bobby Kotick said in a statement: “Our merger will benefit consumers and workers. It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry.”
And Microsoft president Brad Smith added: "We’re grateful to the Court in San Francisco for this quick and thorough decision and hope other jurisdictions will continue working towards a timely resolution. As we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns."
Microsoft claims the deal is designed to boost its presence in the mobile and PC games markets. However, critics are concerned the company may make its titles -- including the hit Call of Duty franchise -- exclusive to the Xbox platform.
The UK regulator has blocked the deal over concerns it would give Microsoft a strong lead in the nascent game streaming market. Microsoft and Activision Blizzard are appealing the decision.
"After today’s court decision in the US, our focus now turns back to the UK," said Smith. "While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA. In order to prioritize work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of the litigation in the UK would be in the public interest and the parties have made a joint submission to the Competition Appeal Tribunal to this effect."