Blizzard insisted that it supported the "right to express individual thoughts and opinions," but also said that players have to "abide by the official competition rules."
The problem, as you might imagine, is that many see this very differently. Critics have already accused Blizzard of giving in to pressure from China -- it might not want to risk losing access to a huge market by appearing to endorse the Hong Kong protests. Chinese tech giant Tencent's minority stake (under 4.9 percent) in Activision Blizzard doesn't help public perception, even if it's not necessarily a factor. There are also questions about the arbitrary nature of the rules. Whether or not someone has caused offense is at "Blizzard's sole discretion." It merely decided that Hong Kong activism was offensive, rather than using clear criteria such as a ban on political statements in matches.
No matter how you see it, the situation illustrates the tightrope Blizzard and others in the game industry have to walk. It doesn't take much to invoke Chinese censorship, and that can prove costly if a company is significantly dependent on the country. At the same time, the company's image takes a bruising elsewhere in the world if it's too willing to comply. Blizzard is trying to occupy a middle ground, and it might not be having much success.