"Plaintiffs' general allegation that the merger may cause 'higher prices, less innovation, less creativity, less consumer choice, decreased output, and other potential anticompetitive effects' is insufficient," wrote U.S. District Judge Jacqueline Corley.
The decision does not affect the U.S. Federal Trade Commission's (FTC) regulatory challenge to the largest-ever gaming industry deal.
Microsoft announced its bid last year, and it also faces competition scrutiny in the EU and UK.
A spokesperson for Microsoft and lawyers for the company did not immediately respond to messages seeking comment.
The case is Demartini v. Microsoft Corp, U.S. District Court, Northern District of California, 3:22-cv-08991.