A week after Microsoft laid off nearly 2,000 employees in its gaming division, the Federal Trade Commission is accusing Microsoft of contradicting its commitment to allow Activision Blizzard to operate independently after the acquisition. The FTC filed a complaint Wednesday before a federal appeals court, arguing that last week's workforce reduction, which affected Activision Blizzard employees, “contradicts Microsoft's statements in these proceedings.” The FTC is requesting a temporary pause in Microsoft's acquisition of Activision Blizzard to continue its investigation into possible antitrust issues.
In its arguments before the FTC, Microsoft said it would treat Activision Blizzard as a vertical acquisition and suggested it would not need to make layoffs, since there would be no layoffs. On January 30, Microsoft announced that it elimination of 1,900 jobs between Activision Blizzard, ZeniMax and Xbox after identifying “areas of overlap” specifically between Microsoft and Activision Blizzard. This is the heart of the FTC's complaint.
“Microsoft's recently announced plan to eliminate 1,900 jobs in its video game division, including in its new Activision unit, contradicts previous statements made to this Court,” the FTC complaint states. “Specifically, Microsoft allegedly stated that the layoffs were part of an 'execution plan' that would reduce the 'areas of overlap' between Microsoft and Activision, which is inconsistent with Microsoft's suggestion to this Court that both companies will operate independently after the merger.”
Although the UK Competition and Markets Authority approved the acquisition of Microsoft for $69 billion of Activision Blizzard in October, the FTC was not satisfied with its own antitrust concerns. The FTC is still contesting the acquisition, meaning it's possible 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 own ability to order relief for employees who were negatively affected by the acquisition.
Microsoft layoffs add up an avalanche of massive layoffs in the video game industry, especially in recent months. An estimated 10,500 people in the video games sector lost their jobs in 2023 – and already in 2024, 6,000 workers have been laid off.