Microsoft's deal to buy Activision Blizzard boosted by US judge

The chances of Microsoft taking over major games publisher Activision Blizzard have been given a big boost after a US judge rejected a request from US regulators to block the deal.

The Federal Trade Commission (FTC) had argued the $69bn (£54bn) merger would "substantially lessen competition".

The decision is the strongest indicator so far that the acquisition will eventually go forward.

It would be the biggest deal of its kind in gaming industry history.

Activision Blizzard has a deep portfolio of very successful games that Microsoft wants to control.

The company is responsible for major titles including World of Warcraft, Diablo and Overwatch, and also owns King, the mobile games developer responsible for Candy Crush.

In an increasingly competitive gaming market, Microsoft is trying to keep up with market leaders PlayStation and Nintendo by investing heavily in gaming content that might encourage players to choose its platforms over their rivals.

The US decision comes after the deal was approved by the European Union, while a decision to block the merger in the UK is currently under appeal.

Judge Jacqueline Scott Corley delivered her ruling after a week-long preliminary hearing in San Francisco.

It was clear given the evidence that it was the fate of the Call of Duty franchise that went a long way to influence this decision.

PlayStation boss Jim Ryan argued in a video deposition that Microsoft would be likely to restrict access to the series for PlayStation users, or offer them a degraded version.

Twice as many players choose to experience the first-person shooter on Sony's console than play on Microsoft's Xbox devices. It is a key part of the company's growth strategy. One in eight PlayStation owners spend at least 30% of their time on the device playing Call of Duty.

However, Microsoft said it had offered a 10-year licensing agreement to Sony for the game and argued that it would make no financial sense to restrict access to such a massive following.

"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," said Bobby Kotick, chief executive of Activision Blizzard.

The ruling is not necessarily the end of the process. The FTC has separately challenged the merger in a parallel process running in administrative court.

In other jurisdictions the impact of the deal on the emerging cloud gaming market was a key contributing factor to the decisions. While it was considered here also, the emphasis of the evidence and the final judgement was more on how this takeover would affect the console market and whether or not it would restrict competition.

The FTC, which had sought to block the deal, will now need to decide whether or not they want to try to pursue their case further.

In order for the deal to go through in its current form Microsoft and Activision need approval from the regulatory bodies in the US, EU and UK.

We're expecting that appeal process to start in earnest later in July.