Activision stock falls as UK regulator raises concerns about Microsoft deal

Yahoo Finance Live anchors discuss a potential barrier to Microsoft's acquisition of Activision Blizzard after a UK regulator, the Competition and Markets Authority, released some preliminary findings from its investigation of the deal.

Video transcript

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JULIE HYMAN: British regulators are issuing a warning on the negative impact that Microsoft's $69 billion takeover of Activision Blizzard could have on gaming competition in the UK. Price hikes and less consumer options were among the concerns raised by the Competition and Markets Authority, which sent letters with possible solutions to both Microsoft and Activision. The companies have until the 22nd to respond. We spoke yesterday to Raymond James analyst Andrew Marok regarding possible setbacks and regulation over this deal. Here's what he had to say.

ANDREW MAROK: It'll kind of be a bolt from the blue, I think, when we get those provisional findings because they do tend to be very indicative of what the final decision is meant to be. And we do believe that as the UK goes, the likely-- the other large geographies like the EU and the US are likely to follow.

JULIE HYMAN: So, guys, we are seeing shares of Activision fall on this because of what Andrew was talking about. Maybe the two parties will be able to come up with remedies that the UK regulator's suggesting. But I think the fact that they came back and didn't just rubber stamp it raises some questions.

BRIAN SOZZI: I'm starting to wonder if Microsoft really needs to even make this deal. When they announced it, Microsoft was just a bit of a different company. Now, so much focus on ChatGPT, AI movements, the rise of Bing. I mean, this is a large company to be swallowing at a time when you seem to be focusing on everything else but video games.

BRAD SMITH: Yeah, well, it's going to be a while until ChatGPT can write out some game code the way that Activision Blizzard has been able to do, and do so well in the game or community that Microsoft, in the time-- let's remember earlier last year, we were seeing every type of gaming deal take place, whether that was the Microsoft Activision Blizzard one.

We had also watched-- oh, my gosh, why is the name escaping me-- Riot, I want to say, but that's-- with all of the consolidation that had been taking place within gaming, it was coming on this tailwind of so many gamers that were trying to figure out, all right, how much time am I going to spend within these realms, especially if I'm not going out into the same social constructs as I was? That's dramatically turned on its head right now, and they're spending less in those game experiences.

And so I think Microsoft still needs to get the deal done for titles. But that's the problem is that Activision Blizzard has done so well in titles that it would create a, at least from the regulatory perspective, competitive landscape that heavily favors Microsoft, who already has a good portion of the console market as well here.

JULIE HYMAN: Meanwhile, Jared Black flagging to us. Microsoft has just rejoined the $2 trillion market cap club--

BRIAN SOZZI: Thank you, ChatGPT.

JULIE HYMAN: --as it goes up 1 and 1/2% in today's session.