U.K. Watchdog Blocks Microsoft’s Bid to Buy Activision

The British mergers regulator blocked Microsoft's $69 Billion takeover bid of Activision Blizzard on Wednesday, ruling that the tech giant would have too much control over the market for cloud-based games if it bought the company behind "Call of Duty".

The decision, which was a surprise to many investors when the Competition Markets Authority narrowed its focus earlier in the month, poses a major obstacle for the deal. It already faces opposition by the F.T.C. The E.U. is also looking into the deal. Activision shares fell 12 percent during premarket trading while Microsoft stock rose almost 8 percent following a strong earnings report.

C.M.A. said that the deal could "undermine the innovation" in cloud gaming by giving Microsoft control of popular game titles. Microsoft, the owner of Xbox, will be given control over popular games. Cloud gaming doesn't require users to own expensive consoles. Microsoft, which accounts for 70 percent of all cloud gaming, did not convince the regulator to grant access to their top games to competitors like Sony and Nintendo.

The regulator said that combining Microsoft and Activision would lead to higher prices for consumers and less choice. "Microsoft enjoys an advantage and a head start in cloud gaming, and this deal will strengthen that position, giving it the power to undermine new and innovate competitors," Martin Coleman who headed a panel to conduct the investigation for the C.M.A. stated in a press release.

Microsoft has vowed to continue on its path, and Brad Smith, the president of the company, said that Microsoft would appeal. He said that the decision "appears to reflect a flawed knowledge of the market and how the relevant cloud technologies actually work."

Investors and company executives were encouraged by the C.M.A.'s decision to focus on cloud gaming concerns only, instead of looking at the larger issue of console competition.

The path to closing the deal has just become more difficult. Microsoft would find it difficult to complete the acquisition without winning approval from Britain, which is home to a large video-game industry. The C.M.A. decision can also be appealed. This process is very demanding, as it focuses on whether or not the regulator has acted legally and rationally.

The European Commission is expected make a decision on the takeover no later than May 22.

Microsoft could also delay the deadline for closing the deal. It had originally set the date of 18 July, but it may do so pending an appeal.

Nestle and PepsiCo's quarterly sales figures have largely held steady after double-digit price increases in the last year. Corporate leaders are concerned about the consumer backlash: Chris Kempczinski is McDonald's C.E.O. and he said that customers have started to reduce their consumption of menu additions such as fries.

Neil Gorsuch's real estate sale has raised new ethical concerns. The revelation that the Supreme Court Justice sold a vacation home to the head Greenberg Traurig - a large law firm that litigates cases in front of the court - stoked further concerns about the financial entanglements of justices. Senators are introducing a bill that will require a code for ethics on the high court. Chief Justice John Roberts, however, has refused to testify before Congress.

G.M. G.M.

After revelations about his relationship with Jeffrey Epstein, a top Citigroup banker has left the company. Paul Barrett, who was a senior manager in Citi's Private Bank, left after The Wall Street Journal revealed that he met with the convicted sexual offender when he worked at JPMorgan Chase even after this bank had cut ties.

Ken Griffin's enthusiasm for Ron DeSantis is waning. The Times reports that the hedge fund billionaire is concerned by recent actions by Florida's Governor, such as DeSantis's downplaying of Russia's invasion in Ukraine and Florida's ban on abortions after six weeks.

Investors digested First Republic's miserable earnings report, which revealed that customers withdrew $102 billion from the bank during the first quarter. Regional lender First Republic is considering a variety of options, including selling assets worth up to $100 billion. Selling would come at a price: First Republic would be forced to include unrealized losses in its balance sheet. This could further reduce its equity.

Investors worry about the cost of funding the bank. The bank borrowed $92 billion in funding from the Federal Reserve, and other government-backed lending organizations like Federal Home Loan Banks. The bank cannot use the money because the cost of the loans is higher than the deposit from customers.

CNBC reports that First Republic's advisers plan to force the banks who have already given it a lifeline of $30 billion to make a decision: either buy bonds at rates above market for a loss of a few billions or pay $30 billion in F.D.I.C. If First Republic fails, there will be fees.

Policymakers are closely watching. Jeff Zients told The Wall Street Journal that regulators were closely monitoring the situation, and would take any necessary action. He did not name specific banks. First Republic has hoped that the government would do exactly what it wants: force the banks to find a permanent solution.

It could get worse before it gets better. Analysts say that while deposit outflows are stabilizing, Tuesday's free fall in the share price could spark another run. David Smith, Autonomous Research's DealBook reporter, said before First Republic announced its earnings that "it seems like they can muddle through," if First Republic continues to do well. "I'm worried that the fact that the deposit situation is so much worse than expected will spark another round outflows," says David Smith of Autonomous Research.

House Speaker Kevin McCarthy has promised to vote on a Republican measure to raise the debt ceiling as early as Wednesday, even though the party's support is far from certain.

The time is critical. The debt limit has become a major issue. Mark Zandi is the chief economist of Moody's and told DealBook that lawmakers have less time to act than they thought. Mark Zandi, chief economist at Moody's, told DealBook that the U.S. could reach its debt limit in early June - not August as previously estimated. This puts even more pressure on lawmakers to pass a quick legislative solution, or else "more chaos" will ensue.

In a speech delivered on Tuesday, Treasury Secretary Janet Yellen said that a default on our debt could lead to an economic and financial disaster. Ms. Yellen said that if a deal was not reached, borrowing costs would rise, as well as payments on credit cards, auto loans and mortgages. She said Social Security and military payments would cease and the credit markets would degrade. She called on Congress not to impose any conditions when raising or suspending the limit. "It shouldn't wait until the very last minute," said Ms. Yellen.

However, a dozen Republicans continue to oppose Mr. McCarthy’s bill, allegedly because it eliminates clean energy tax credit, while others are in favor of work requirements linked to federal assistance.

Biden threatened on Tuesday to veto any legislation that reaches his desk, even if McCarthy is successful in passing it. Zandi stated that the impasse increased the chances of an emergency measure temporarily suspending the debt limit. It's possible they will push the deadline back to September.

Dr. Anthony Fauci, America's ex-top public health official, opened up in an extended interview for The New York Times Magazine about the nation’s response to a coronavirus outbreak, the criticism he received, and the lessons learned.

Anheuser-Busch InBev's C.E.O. Michel Doukeris may be asked his most difficult questions yet when the company reports its quarterly results.

AB InBev announced on Tuesday that it had placed two of its executives on leave. The world's largest beer manufacturer is trying to quell the controversy that erupted earlier this month following a Bud Light social media campaign featuring transgender influencer Dylan Mulvaney.

The reaction was swift. Ron DeSantis, the Florida governor who is known for attacking corporations whose political views he does not agree with, also weighed in: "It’s part of a bigger thing where corporate America tries to change our nation."

AB InBev has become the latest brand of consumer products to be embroiled in America’s culture wars. DeSantis is a possible G.O.P. Disney, a potential presidential candidate, also had a fight with DeSantis after Disney criticized the so-called “don't mention gay” law in Florida.

North America was already experiencing a decline in sales. Bud Light sales had fallen in the region, which was AB In Bev’s worst performing market by volume. Harry Schuhmacher of Beer Business Daily told The Times that "this just accelerates the decline curve."

Mr. Doukeris is largely silent. Before the controversy broke out, he told The Financial Times that he was trying to avoid polarizing topics and that the company did not need to "be there and talk about everything." However, on April 14, Brendan Whitworth issued a press release that attempted to shift the attention from politics to the beer.

The company has also fired Alissa Hinerscheid, vice president of Bud Light's marketing, and Daniel Blake who is responsible for Anheuser-Busch mainstream brands.

Deals

Binance.US has cancelled its $1.3 billion purchase of assets from Voyager Digital (the bankrupt crypto lender) that was to have been made by Binance.US. (Reuters)

Endeavor has agreed to sell IMG Academy to BPEA EQT, an investment firm, for a valuation of $1.25 billion. The boarding school is for young athletes who are looking to become professional athletes. (WSJ)

Policy

The Best of the Rest

Ken Griffin, the hedge fund mogul who runs Success Academy in New York City's largest charter school operator, has donated $25 million. (Bloomberg)

"Black-Scholes 50 years: How a pricing model changed finance"

Xerox will donate Parc, the research centre that gave birth to the modern P.C. and its graphical user interface, as well as the mouse, the nonprofit SRI International. (Quartz)

Seth Rogen will play the hedge fund manager Gabe Plotkin, and Paul Dano will portray the meme stock influencer Keith Gill in the movie. (Insider)

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