When a federal judge in California rejected the US Federal Trade Commission’s request to block Microsoft’s $75bn acquisition of Activision Blizzard, she dealt a sharp setback to the regulator’s ambitious effort to toughen antitrust enforcement under chair Lina Khan.

Judge Jacqueline Scott Corley ruled on Tuesday that the FTC had failed to prove that the megamerger would harm competition in the video game industry. The details of her ruling revolved around whether Microsoft would limit its rival Sony’s access to blockbuster Activision game Call of Duty, but the decision’s resonance in Washington and corporate America will be much broader.

Appointed by President Joe Biden, Khan came to prominence as a young academic with a paper calling for the break-up of Amazon. She has aroused animosity and fear in corporate America for her willingness to use new legal tactics to crack down on anti-competitive conduct even as her efforts have met with mixed results.