The U.S. Federal Trade Commission (FTC) has formally withdrawn its legal challenge to Microsoft’s $69 billion acquisition of video game publisher Activision Blizzard, stating the case is no longer in the public interest. The move effectively ends one of the most high-profile antitrust battles in the gaming industry.

The decision, announced Thursday, represents a major reversal for the agency, which had previously argued that the deal could harm competition—particularly in the console and cloud gaming markets. The acquisition, finalized in 2023, remains the largest ever in the video game sector.

Microsoft President Brad Smith welcomed the outcome, calling it “a victory for gamers across the country and for common sense in Washington, D.C.”

The FTC had opposed the deal on grounds that Microsoft might limit access to blockbuster franchises such as Call of Duty in ways that could disadvantage competitors. But a federal judge denied the agency’s request for a preliminary injunction in May, allowing the merger to proceed. With that ruling in hand, Microsoft closed the deal, making any attempt to unwind it far more difficult.

“Once a merger is completed, the legal and logistical hurdles to reversing it become significantly higher,” an FTC spokesperson said. “Given this reality, our resources must be directed where they can have the most impact.”

The agency’s decision comes amid a broader recalibration of enforcement strategy under new FTC Chair Andrew Ferguson. Since taking over, Ferguson has begun shifting the agency away from aggressive merger challenges favored by his predecessor Lina Khan, focusing instead on cases more likely to yield tangible legal victories.

On the same day it dropped the Microsoft case, the FTC also dismissed a separate lawsuit against PepsiCo that had accused the company of price discrimination in favor of Walmart.

Ferguson has also reportedly greenlit a new investigation into whether major advertisers colluded to cut spending on social media platform X (formerly Twitter), aligning with enforcement priorities more in step with former President Donald Trump’s administration.

While the FTC’s retreat marks the end of its effort to unwind the Microsoft–Activision deal, the broader debate over market consolidation in the tech and gaming sectors is far from over—especially as other megamergers loom on the horizon.