No the game is not canon. The developers confirmed very early in production that it wouldn't be. It's a mishmash of different versions of the characters from different times.

For instance, Sub-Zero LOOKS like his Deadly Alliance self, but his backstory is that of his MK2 self.

Scorpion's personality, meanwhile, is the way it was in MK4, with him serving Quan Chi and thinking the Younger Sub-Zero killed his family and clan.

Kitana still lives in Outworld with Edenia not free yet, like in MK3.

Shang Tsung looks like he did in MK2 or 3, but lives on his island, which was only true in MK1. And he seems to be the leader of Baraka and the Tarkatans, which has never been true before.

Kano and Liu Kang are based on their movie versions, rather than the ones in the games. (Kano has a full head of hair and bushy beard instead of going bald, Liu has a giant torso like Robin Shou and doesn't make Bruce Lee noises anymore except for the Bike Kick)

And Raiden's bio says he's Kahn's brother, which is from the movies as well, and isn't true in the continuity of the games.

The closest it comes to representing any specific time period is just after MK3, as the game's plot starts just after the heroes have prevented an invasion of Earth by Shao Kahn.
They picked and chose different versions of the characters and their histories in this way so that the game would present the versions of the characters that unfamiliar casual gamers would recognize best.