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FTC cries foul at Microsoft’s 1,900 layoffs with Activision Blizzard merger under threat

Microsoft counter claim that Activision Blizzard were already planning layoffs before taking them on
FTC cries foul at Microsoft’s 1,900 layoffs with Activision Blizzard merger under threat
  • Microsoft has been challenged by the FTC over its 1,900 layoffs announced in January
  • The merger with Activision Blizzard was agreed on the terms of a vertical acquisition
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More than two years on from Microsoft’s announcement to acquire Activision Blizzard, the deal continues to cause controversy with Microsoft seemingly always in hot water. The $69 billion deal was completed in October 2023 after the Xbox maker finally jumped UK regulatory hurdles, but now post-deal, it’s the US regulators crying foul.

After all, Microsoft assured America’s Federal Trade Commission in the leadup to the acquisition that the merging companies would remain largely independent and "maintain the pre-merger status quo". Yet, only three months on from the acquisition, Microsoft announced 1,900 layoffs across Xbox, Zenimax and Activision Blizzard, a striking number that accounts for approximately 8% of Microsoft’s gaming division.

Microsoft have already hit back, in a new filing claiming that "Activision was already planning on eliminating a significant number of jobs while still operating as an independent company."

FTC terms

The FTC’s approval of Microsoft’s deal hinged largely on its promise to merge vertically, eliminating the need to lay off workers, as reported by Polygon. Now that Microsoft has laid off so many staff, FTC lawyer Imad Abyad has cited that letter of intentions in a complaint to a federal appeals court, arguing that layoffs to confront "areas of overlap" (in Microsoft Gaming CEO Phil Spencer’s own words) directly undermines the company’s vertical acquisition claims.

When announcing the layoffs in January, Spencer stated: "As we move forward in 2024, the leadership of Microsoft Gaming and Activision Blizzard is committed to aligning on a strategy and an execution plan with a sustainable cost structure that will support the whole of our growing business. Together, we’ve set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth."

How damning Spencer’s "areas of overlap" acknowledgement will prove to be remains to be seen, but whether the FTC even can reverse the deal after it’s been approved is up in the air. For now at least, the regulatory body is looking to the court to put a hold on further merging activity between Microsoft and Activision Blizzard.

All this just after Microsoft became the biggest public company in the world