Activision Blizzard sinks 10% as the UK blocks Microsoft's $69 billion buyout on fears it could harm cloud gaming competition

• Activision Blizzard shares sank Wednesday after the UK blocked its pending buyout by Microsoft. 
• A UK regulator said the $69 billion deal would cause "harm" to competition in cloud gaming in the country. 
• Microsoft said it will appeal the regulator's decision. 

Activision Blizzard sharply dropped Wednesday after the "Call of Duty" publisher's pending buyout by Microsoft was rejected by a UK regulator on the grounds it would hurt competition in cloud gaming.  

Activision shares fell about 10% at the open to $79.30. The stock dropped below $80 a share for the first time in a month after the $69 billion merger deal was blocked.

"We remain fully committed to this acquisition and will appeal," Microsoft said about the decision by the UK Competition and Markets Authority related to the deal it struck in January 2022. 

"Cloud gaming needs a free, competitive market to drive innovation and choice. That is best achieved by allowing the current competitive dynamics in cloud gaming to continue to do their job," the CMA said in a statement outlining Microsoft's "strong position" in cloud gaming services. It said the merger would cause "harm" to competition in cloud gaming in the UK. 

Ahead of the UK decision, the stock had been up 13% in 2023. Microsoft was preparing to close its Activision deal despite the US Federal Trade Commission's move to block it because of antitrust concerns, the New York Post reported Tuesday. The company was feeling confident it was set to secure UK approval, the report said, citing unnamed sources. 

The CMA said the deal would reinforce Microsoft's advantage in the market by giving it control over "important gaming content" including "Call of Duty," "Overwatch," and "World of Warcraft". 

The regulator said Microsoft accounts for up to 70% of global cloud gaming services stemming from its ownership of videogame system Xbox, Windows PC operating system and cloud computing infrastructure in Azure and Xbox Cloud Gaming. 

"The evidence available to the CMA indicates that, absent the merger, Activision would start providing games via cloud platforms in the foreseeable future," it said. 

Microsoft said it had signed contracts to make Activision Blizzard's games available on 150 million more gaming devices and it would reinforce the commitments through regulatory remedies.  

"[This] decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works," Brad Smith, Microsoft's president, said in a statement. 

Microsoft shares surged early Wednesday after the ChatGPT investor revealed AI boosted its cloud sales. Quarterly results released late Tuesday beat Wall Street's expectations. Shares of the tech giant were up almost 7%, to $293.80 shortly after the opening bell. 

—Brad Smith (@BradSmi) April 26, 2023