Yesterday we had major developments on the Microsoft/Activision Blizzard merger worth $68.7 billion. First and foremost, Judge Jacqueline Scott Corley of the North District of California denied the preliminary injunction the US Federal Trade Commission requested a month ago to block the deal.

　　Shortly after the big news, Microsoft and the UK regulator (the Competition and Markets Authority, or CMA) jointly decided to pause the ongoing Competition Appeal Tribunal (CAT) appeal to resume talks. Microsoft said in a statement:

　　Our focus now turns back to the UK. 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.

　　According to CNBC's David Faber, Microsoft and the CMA might have agreed to a 'small divestiture' to address the UK regulator's concerns. Indeed, in the CMA's official response, we can read that it stands ready to consider 'proposals to restructure the transaction in ways that address the Final Report's concerns'. The CMA had previously hinted that it would accept the divestiture of Call of Duty, meaning that it would expect Microsoft to sell the IP and the studios working on it to someone else.

　　Of course, that's not likely, given that the winds have now turned in Microsoft's favor. The small divestiture could instead be Microsoft opting to 'carve out' Activision Blizzard content from the Game Pass library available in the United Kingdom. It's something that Microsoft has reportedly been considering ever since the CMA blocked the deal, and even CEO Satya Nadella didn't rule it out in an interview. Such a move certainly wouldn't be favorable to UK gamers, who would be deprived of the economic benefit of accessing Activision Blizzard games for a lower price through the subscription service.

　　The FTC still isn't ready to throw in the towel, by the way. An FTC spokesperson expressed disappointment at the Judge's verdict, mentioning the 'clear threat' posed by the merger to open competition. The spokesperson also said the FTC would announce in the coming days the next step in their 'fight to preserve competition and protect consumers'.

　　According to Bloomberg, the FTC is leaning into filing an appeal to the 9th Circuit Court of Appeals. However, it needs to do so and most importantly it needs to get an emergency stay before Friday, as that's when the Temporary Restraining Order (TRO) will expire, allowing Microsoft to complete the Activision Blizzard deal just ahead of the July 18th deadline. Stanford Law Professor Doug Melamed told Bloomberg it is very unlikely the FTC could get that approved in time.

　　Meanwhile, Activision Blizzard stock rose 10% yesterday, closing at $90.99 per share (Microsoft bought the company at $95 per share).