Microsoft Is Undermining Activision's Independence With Latest Layoffs, FTC Says
Microsoft contradicted its own representations of what would happen post-merger, the FTC says.
Microsoft's recent announcement of 1,900 layoffs within its Xbox division, including Activision Blizzard employees who joined Microsoft with the buyout, has prompted the United States government to call Microsoft out. The US' Federal Trade Commission (FTC) said in a memo (via The Verge) that the layoff plan "contradicts" how Microsoft represented itself in its proceedings to get the deal done in the first place.
Microsoft's $74.5 billion deal to buy Activision Blizzard is already done, but the FTC said it is trying to temporarily pause the buyout pending the FTC's judgment of it on antitrust merits.
"Microsoft's recently reported plan to eliminate 1,900 jobs in its video game division, including in its newly acquired Activision unit, contradicts the foregoing representations it made to this court," FTC counsel Imad D. Abyad said.
In its own announcement detailing the layoffs, Microsoft said it was making cuts in "areas of overlap" that existed between Microsoft and Activision Blizzard. The FTC said this is "inconsistent with Microsoft's suggestion to this court that the two companies will operate independently post-merger."
Microsoft's recent round of 1,900 layoffs impacted developers and staff from across Activision Blizzard, as well as roles that existed within Microsoft. The Xbox team at Microsoft had around 22,000 employees prior to the cuts.
A spokesperson for Microsoft told GameSpot that the FTC is ignoring reality.
"In continuing its opposition to the deal, the FTC ignores the reality that the deal itself has substantially changed," a representative said. "Since the FTC lost in court last July, Microsoft was required by the UK competition authority to restructure the acquisition globally and therefore did not acquire the cloud streaming rights to Activision Blizzard games in the United States. Additionally, Sony and Microsoft signed a binding agreement to keep Call of Duty on PlayStation on even better terms than Sony had before."
In other Xbox news, it's been reported that Microsoft is considering bringing some of its games, including Starfield, Indiana Jones and the Great Circle, and Gears of War, to PlayStation and Nintendo. This is not yet confirmed, but the company has said it will share more details soon.
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