A federal appeals court denied the Federal Trade Commission’s request to temporarily stop Microsoft (MSFT) from closing its acquisition of video game maker Activision Blizzard (ATVI), removing one of the last hurdles to completing the $69 billion deal.

The decision made by a three-judge panel for the 9th Circuit Court of Appeals upholds a ruling by a California federal district court judge on Tuesday saying it would not stop the transaction from moving forward while a separate FTC antitrust challenge plays out in court.

The deal still has to gain approval of UK regulators. The agency, Competition and Markets Authority (CMA), on Tuesday paused its legal proceedings to block the acquisition in favor of renewed negotiations with Microsoft. Microsoft has agreed to pay Activision a $3 billion break up fee in the event the tie-up failed to close by that date.

"We appreciate the Ninth Circuit's swift response denying the FTC's motion to further delay the Activision deal," Microsoft president and vice-chair Brad Smith wrote on Twitter. "This brings us another step closer to the finish line in this marathon of global regulatory reviews."

Legal experts view the ruling as a win for Microsoft, even though the FTC's underlying lawsuit alleging the deal would harm competition remains pending.

They reason that Microsoft's costs to keep the deal afloat while awaiting the outcome of the FTC's lawsuit would reach a tipping point, given that the agency is under no deadline to resolve its case.

The FTC first filed a challenge to block the merger in December. Its lawsuit, brought in the agency’s in-house court, alleges that combining the two companies would suppress competition in three markets: gaming consoles, subscription content, and cloud-gaming.

The acquisition, if closed, would be the largest in Microsoft’s history and the largest in the gaming industry.

Microsoft, which owns gaming console Xbox, controlled 16% of the console market in 2021. Microsoft said in court documents that since 2021 its share of console sales rose to 21%, though it has remained in third place behind PlayStation (SONY) and Nintendo (NTDOY).

The key to tie up is Activision Blizzard's lucrative "Call of Duty" franchise. The game series earns Activision Blizzard billions each year, with the latest installment, 2022's "Call of Duty: Modern Warfare II," clearing $1 billion in sales in its first 10 days on the market.

Adding the Call of Duty and Activision's other game franchises to Microsoft’s existing first-party titles including “Halo” and “Forza” would catapult Microsoft past Nintendo (NTDOY) to make the company the second-largest home console maker by revenue behind Sony (SONY). It would also put Microsoft behind Tencent and Sony as the third-largest gaming company by global revenue.

Global regulators including those in the EU, Brazil, China, Japan, and South Korea have already approved the deal.

The UK's CMA has voiced concerns that the deal could make Microsoft so dominant in cloud gaming, that it could lead to “reduced innovation and less choice for UK gamers over the years to come."

To assuage regulators' concerns that Microsoft would abuse the deal to wall off its leading "Call of Duty" game from its rivals, the company has signed agreements with Switch console owner, Nintendo, and Nvidia promising to keep the game available on the competing platforms for at least 10 years.

The FTC did not immediately respond to Yahoo Finance's request for comment on the appellate court decision.

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