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.
"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. Specifically, Microsoft reportedly has stated that the layoffs were part of an 'execution plan' that would reduce 'areas of overlap' between Microsoft and Activision, which is inconsistent with Microsoft’s suggestion to this Court that the two companies will operate independently post-merger."
The FTC has a point – many have been surprised to see how quickly and aggressively Microsoft has involved themselves in the running of Activision Blizzard given how they characterized their plans for the company pre-acquisition. That said, even if Microsoft misled the FTC on this front, will it make much difference? In a statement provided to Wccftech, Microsoft argues the nature of the Acti-Blizz deal has changed significantly in recent months...
"In continuing its opposition to the deal, the FTC ignores the reality that the deal itself has substantially changed. 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."
And the context surrounding deal is likely set to change even more, as rumors have been running rampant that Xbox may essentially be going third party, with former exclusives like Starfield, Indiana Jones and the Great Circle, and even Gears of War potentially going to PlayStation and other platforms. Microsoft is promising a “business update event” next week, so we’ll know more then, but if Microsoft is indeed moving away from their traditional Xbox business and exclusives, the FTC’s objection to their acquisition of Activision Blizzard has to be dead, regardless of how unwilling they are to give up this particular bone.
What do you think Xbox announce next week? And could they somehow run afoul of regulators again because of it?
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