The UK and Microsoft Make Up

British antitrust regulators scrutinizing Microsoft's blockbuster purchase of videogame maker Activision Blizzard on Friday dropped concerns that the deal would hurt the console gaming market, narrowing the scope of their investigation. The Competition and Markets Authority said it no longer thinks the $69 billion deal will result in a "substantial lessening of competition" for console games in the U.K., an update to provisional findings issued last month based on new evidence.

The all-cash deal is set to be the biggest in the history of the tech industry. But it faces stiff opposition from rival Sony and is being examined by regulators in the U.S. and Europe over fears that it would give Microsoft control of popular game franchises like Call of Duty.

The purchase hit a hurdle last month when the U.K. watchdog said in its initial decision that the deal would stifle competition for both cloud and console gaming. Based on the new evidence, including data that gives better insight into videogamers' purchasing behavior, the watchdog said it "would not be commercially beneficial" for Microsoft to make Call of Duty exclusive to its Xbox console. That's the opposite of its original analysis, which indicated that it would be profitable to block the game from competing consoles like Sony's PlayStation. "The cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action," Martin Coleman, chair of the CMA's independent expert panel investigating the deal, said in a press release.

The watchdog is still investigating the deal's impact on the cloud computing market and plans to issue a final report by April 26. Microsoft said it welcomed the findings and would work with the watchdog "to resolve any outstanding concerns."