The Federal Trade Commission accuses Microsoft of misrepresenting Activision Blizzard’s plans after layoffs

The Federal Trade Commission accuses Microsoft of misrepresenting Activision Blizzard’s plans after layoffs

One week after Microsoft laid off nearly 2,000 employees in its gaming division, the Federal Trade Commission accused Microsoft of violating its pledge to allow Activision Blizzard to operate independently after the acquisition. The FTC filed a complaint with a federal appeals court on Wednesday, arguing that last week’s downsizing, which affected Activision Blizzard employees, “is inconsistent with Microsoft’s representations in this lawsuit.” The Federal Trade Commission (FTC) is demanding a temporary halt to Microsoft’s acquisition of Activision Blizzard while it investigates potential antitrust issues.

In its arguments to the FTC over the past two years, Microsoft said it would treat Activision Blizzard as a vertical acquisition and suggested it would not need to lay off workers, because there would be no layoffs. On January 30, Microsoft announced that it would cut 1,900 jobs across Activision Blizzard, ZeniMax, and Xbox after specifically identifying “areas of overlap” between Microsoft and Activision Blizzard. This discrepancy is at the heart of the FTC’s complaint.

“Microsoft’s recently reported plan to eliminate 1,900 jobs in its video game division, including its newly acquired Activision unit, is inconsistent with prior representations it made to this court,” the FTC complaint said. “Specifically, Microsoft stated that the layoffs were part of an ‘implementation plan’ that would reduce ‘areas of overlap’ between Microsoft and Activision, which is inconsistent with Microsoft’s proposal to this court that the two companies would operate independently after the merger.”

Although the UK Competition and Markets Authority approved Microsoft’s $69 billion acquisition of Activision Blizzard in October, the Federal Trade Commission has not been satisfied with its antitrust concerns. The FTC is still challenging the acquisition, which means there’s a possibility that Microsoft could be forced to divest all or part of Activision Blizzard.

In the complaint filed Wednesday, the FTC argued that the recent layoffs also undermine its ability to seek relief for employees adversely affected in the takeover.

Microsoft’s layoffs join a torrent of mass layoffs in the video game industry, specifically in the past few months. An estimated 10,500 people in video games lost their jobs in 2023 – and already in 2024, 6,000 workers were laid off.

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