US regulator the Federal Trade Commission has moved to appeal against a decision to allow Microsoft to proceed with its $69bn (£53bn) purchase of games publisher Activision Blizzard.
Earlier this week, the FTC’s request to block the takeover was rejected by a district judge in San Francisco.
The technology giant’s deal to buy the Call of Duty maker would be the biggest of its kind in gaming industry history.
Microsoft said it planned to fight the regulator’s appeal.
“We’re disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward,” Microsoft President Brad Smith said in a statement.
The FTC has alleged that the deal would hurt gamers and reduce competition by giving Microsoft, the maker of the Xbox, power to deny rivals access to Activision’s games.
The FTC had sought an emergency ruling to block the deal while it challenged the planned takeover.
On Tuesday, US District Judge Jacqueline Scott Corley said she did not think the FTC would win in its case.
She said the regulator had not shown that “the combined firm will probably pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets”.
The ruling in the US is the strongest indicator so far that Microsoft’s purchase would eventually go forward.
Also this week, the UK’s competition regulator appeared to ease its opposition to the deal.
The Competition and Markets Authority (CMA) was the world’s first regulator to block Microsoft’s proposed takeover of Activision.
It had been concerned that the deal would reduce innovation and leave gamers with fewer choices.
On Wednesday, the CMA said it was “ready to consider any proposals from Microsoft to restructure the transaction”.
“Microsoft and Activision have indicated that they are considering how the transaction might be modified, and the CMA is prepared to engage with them on this basis,” it added.
The Microsoft-Activision deal, which is due to close later this month, has split global watchdogs.
EU regulators have approved the deal, saying that Microsoft had addressed their concerns on competition issues.
