What happened
On a report that its planned tie-up with a giant peer might be heading into rough regulatory waters, Activision Blizzard (ATVI) stock took a body blow from investors on Tuesday. They traded the video game giant's shares down by nearly 3%, on a day when the S&P 500 index slid by only 0.2%.
So what
Early that morning, Reuters reported that that there is a strong possibility for the European Union (EU) to issue a formal antitrust warning to would-be Activision Blizzard acquirer Microsoft (MSFT -1.84%).
Citing unnamed "people familiar with the matter," the news agency said that the EU's executive body and frequent regulator, the European Commission (EC), is preparing a statement of objections to the proposed deal. This would be issued within a matter of weeks.
Microsoft and Activision Blizzard have agreed for the former to purchase the latter in a blockbuster deal valued at $69 billion. This was announced almost exactly one year ago.
Reuters quoted Microsoft as saying that "We're continuing to work with the European Commission to address any marketplace concerns. Our goal is to bring more games to more people, and this deal will further that goal."
Activision Blizzard has not yet officially commented on the matter.
Now what
Although Microsoft has, somewhat uncharacteristically, sounded cooperative notes about how it'll deal with regulators, this deal might be a tough swallow for some of them. After all, it would marry a powerful software and cloud company with a dominant video game producer and developer, concentrating much power and reach in only one entity.
The regulatory aspect of the deal is starting to get complex, which might not bode well at all for its fate.
