Microsoft’s fortunes in its hotly contested takeover of video game company Activision Blizzard dramatically improved Tuesday after a federal judge sided with the companies over the Federal Trade Commission’s attempt to block the deal, and after a U.K. antitrust regulator signaled its receptiveness to reversing its own decision against the merger.

Tuesday’s ruling from U.S. District Judge Jacqueline Scott Corley is a stinging rebuke for the FTC in the biggest test yet of its ability to police competition in fast-moving technology markets, a key priority for agency Chair Lina Khan, an antitrust hawk appointed by President Joe Biden in 2021. The FTC initially challenged the deal in its in-house court in December.

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The American Economic Liberties Project, a progressive advocate of aggressive antitrust enforcement, urged the FTC to appeal. “When Microsoft’s own emails say they are building a ‘moat’ and trying to ‘spend’ their competitors ‘out of business,’ that should be enough for the court to hit pause,” said Lee Hepner the group’s legal director. “The fact that Judge Corley’s son works for Microsoft taints the outcome at a time when judicial ethics are top of mind for many.”

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