Microsoft has rejected the Federal Trade Commission's recent complaints about the mass layoffs at Activision. The regulator previously argued that the move could be used as the basis for reversing Microsoft's acquisition of Activision Blizzard, which was completed in October 2023.
Just three months later, Microsoft announced major layoffs, revealing intentions to eliminate around 1,900 positions across its three main game publishing arms: ABK, ZeniMax Media, and Xbox Game Studios. Although the move was framed as a company-wide initiative, subsequent reports from industry insiders and the affected staffers have suggested that the vast majority of those redundancies were identified at the tech giant's newest subsidiary, Activision Blizzard.
A February 7 letter to the U.S. Court of Appeals for the Ninth Circuit subsequently saw the FTC argue Microsoft's acquisition of Activision Blizzard can be reversed because the tech giant previously gave assurances that it would not need to resort to such workforce cutbacks if the $68.7 billion transaction was approved. In an electronic filing submitted a day later, Microsoft rejected that train of thought as misleading, arguing that Activision was already planning to eliminate a «significant number» of positions prior to the acquisition.
The tech giant made no attempt to expand on how «significant» those planned redundancies actually were. It has instead characterized the cutbacks as keeping up in line with «broader» industry trends. For reference, even the most conservative estimates suggest that thousands of people working in game development have lost their jobs since early 2023. One industry veteran recently described the current state of gaming as a «disaster zone» for professionals trying to make a living.
Consistent with broader trends in the gaming industry, Activision was already planning on eliminating a significant number of jobs while still operating as an independent company.
Microsoft concluded that given the macro trends in the sector, the mass layoffs at Activision can not be «attributed fully» to its late 2023 acquisition. And while the company did acknowledge that the move resulted in some such cutbacks, redundancies are a fairly common side effect of mergers, with their overall volume typically being proportional to the combined size of the consolidating parties. In that context, Microsoft's decision to eliminate around 9% of its gaming workforce post-acquisition does not stand out as exceedingly anomalous.
The tech giant claims it is still willing to reverse its acquisition, having said as much in its February 8 court filing. Elaborating on that point, a company representative explained that the deal was structured in a way that the combined entity can
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Microsoft completed its $69 billion acquisition of Activision Blizzard in October, though life under new ownership has got off to a rough start for the latter. Last month, Microsoft announced that it was cutting 1,900 jobs across its entire gaming division, with Activision Blizzard, Bethesda, and Xbox all set to be impacted.
Microsoft’s decision to lay off over 1,900 employees across Xbox and Activision Blizzard only three months after acquiring the latter has been cause for plenty of debate, and it seems U.S. government officials were definitely keeping an eye on the situation. While the Activision Blizzard acquisition has officially gone through, the U.S. Federal Trade Commission has not given up their fight against it, filing appeals to block and reverse the deal as recently as this past December, and now they’ve filed a complaint about the recent Activision Blizzard layoffs. According to the FTC, the layoffs directly contradict statements that Microsoft made to them that Acti-Blizz would be operated independently at arm’s length, with no redundancies between the two companies.
The US Federal Trade Commission (FTC) has said the recent spate of layoffs at Microsoft «contradict» what was presented in the antitrust trial over the company's acquisition of Activision Blizzard.