The U.S. software giant still faces a battle to clinch a deal. It has until May 24 to appeal a decision by Britain's Competition & Markets Authority (CMA) to block it. A final decision may take months. The U.S. Federal Trade Commission's case against the deal is also pending at the agency.

The European Commission said that the biggest-ever deal in gaming was pro-competitive due to Microsoft's licensing deals, confirming a Reuters report in March.

Such licenses are "practical and effective," European Union antitrust chief Margrethe Vestager told reporters.

"Actually they significantly improve the condition for cloud game streaming compared to the present situation, which is why we actually consider them pro-competitive," she added.

The EU watchdog said Microsoft has offered 10-year free licensing deals to European consumers and cloud game streaming services for Activision's PC and console games.

Microsoft has in recent months signed such deals with Nvidia , Nintendo, Ukraine's Boosteroid and Japan's Ubitus to bring Activision's Call of Duty to their gaming platforms should the deal go through.

"The European Commission has required Microsoft to license popular Activision Blizzard games automatically to competing cloud gaming services. This will apply globally and will empower millions of consumers worldwide to play these games on any device they choose," said Microsoft President Brad Smith.

Vestager said the Commission has a different assessment of how the cloud gaming market will grow in contrast with the UK.

"They see this market developing faster than we would think," she said. "There is a bit of a paradox here, because we think that the remedies that we have taken and will allow for licensing to many, many more in the cloud gaming markets."

The UK Competition and Markets Authority said it stood by its veto. Microsoft will appeal to the Competition Appeal Tribunal, with a decision expected to take months.

The other remaining big hurdle is the U.S. Federal Trade Commission which is seeking to block it. Japan approved the takeover in March.