In a surprising turn of events, the UK’s Competition and Markets Authority (CMA) has announced that it may reassess its stance on the biggest gaming deal in history – the controversial merger between tech titan Microsoft and gaming behemoth Activision Blizzard.

Previously, the CMA had staunchly opposed the deal, citing concerns over market competition. They became the first regulator to block the $69 billion deal in April. However, this opposition seemed to soften in light of a recent U.S. court ruling permitting the merger, a decision that left the British regulator somewhat isolated.

The CMA has now stated that while merged parties cannot submit new remedies after a final report, they can restructure a deal, potentially leading to a new merger investigation. Both Microsoft and Activision Blizzard have indicated their willingness to reconsider the transaction’s structure in light of the CMA’s concerns.

The sudden shift in the CMA’s stance has caught industry observers and deal advisors off guard. “It is really an unprecedented and dramatic turn of events,” said Alex Haffner, a competition partner at UK law firm Fladgate.

The CMA’s decision to backtrack comes at a crucial moment as an appeal was imminent, with many speculating that the UK regulator was eager to avoid standing alone from the EU and U.S., two key jurisdictions in such matters.

However, Microsoft and Activision Blizzard are now navigating a precarious path. They must craft a proposal that appeases the British regulator while remaining in line with remedies already accepted by the European Union.

The U.S. court ruling permitting the merger seems to have reignited hopes for the landmark deal, with Microsoft potentially facing a hefty $3 billion breakup fee if the deal falls through. Both parties are now dedicated to modifying the agreement to secure regulatory approval, despite a deal deadline of July 18.

While this development marks a dramatic twist in the tale of Microsoft-Activision Blizzard merger, many questions remain unanswered. The specifics of what structural alterations the companies could make to appease the CMA are unclear, with some experts speculating that significant changes could trigger further inquiries from U.S. and EU regulators.

Furthermore, the CMA has not provided any additional clarification on its U-turn or the new investigation process, including whether it would fit into its traditional Phase 1 and 2 process, the latter of which could take up to a year.