Activision Blizzard-Microsoft Deal Blocked by UK CMA, ATVI Shares Plummet

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The United Kingdom's Competition and Markets Authority (CMA) has issued an order blocking Microsoft's pending acquisition of Activision Blizzard. The decision comes after an in-depth review of the proposed merger, with the CMA citing concerns that the deal would alter the future of the fast-growing cloud gaming market and lead to reduced innovation and less choice for UK gamers. The agency ruled that while having Activision's content available on Xbox Game Pass would be beneficial to some customers, it would not outweigh the overall harm to competition arising from the merger.

Microsoft's proposed solution to address the CMA's complaints failed to effectively address the concerns in the cloud gaming sector and had significant shortcomings, requiring regulatory oversight by the CMA. The agency stated that cloud gaming needs a free, competitive market to drive innovation and choice. The $68.7B deal, announced in January 2022, has long faced roadblocks in the UK.

The news has hit Activision Blizzard's shares hard, with the stock trading over 11% lower in pre-market on Wednesday. However, Microsoft's shares have risen over 7% following the announcement. ATVI shares are currently trading around $78, which is still far above the $65 area where it was prior to the initial merger announcement.

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