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The US Federal Trade Commission (FTC) has recently raised concerns over Microsoft’s decision to implement significant job cuts within its gaming division following its acquisition of Activision Blizzard (via VGC).
This move by Microsoft has drawn scrutiny from the FTC, as it appears to contradict previous assurances made during the acquisition process.
FTC opposes Microsoft’s gaming division layoffs post-Activision Blizzard acquisition, citing contradictions to previous promises, sparking ongoing legal proceedings, and reflecting industry-wide layoffs.
FTC Opposes Microsoft’s Recent Massive Layoffs
Microsoft’s $69 billion acquisition of Activision Blizzard was completed in October 2023, following a long and arduous approval process from competition watchdogs. However, the recent announcement of plans to cut 1,900 jobs across Xbox, Bethesda, and Activision Blizzard has raised eyebrows at the FTC.
According to Bloomberg, the FTC has filed a complaint with the 9th US Circuit Court of Appeals, highlighting discrepancies between Microsoft’s promises and its actions. The FTC argues that the job cuts undermine the assurances given by Microsoft regarding the independent operation of Activision Blizzard post-acquisition.
These layoffs have impacted various studios within Activision Blizzard, including Sledgehammer Games, Toys for Bob, and Blizzard. Notably, over 100 employees working on an untitled survival game at Blizzard were reportedly let go.
Microsoft’s gaming chief, Phil Spencer, addressed the layoffs in a message to staff, citing the need to align priorities and identify areas of overlap. However, the FTC maintained that this move was “inconsistent with Microsoft’s suggestion to this Court that the two companies will operate independently post-merger”.
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Ongoing Legal Proceedings
The FTC’s complaint comes amidst ongoing legal proceedings surrounding the acquisition. While a federal judge initially ruled in favor of Microsoft, allowing the merger to proceed, the FTC has appealed this decision. The federal appeals court in San Francisco is currently reviewing the case.
Furthermore, the FTC expressed concerns that the layoffs could hinder its ability to address any potential antitrust violations related to the acquisition. The agency believes that the job cuts indicate areas of overlap created by the merger, which could have broader implications for competition within the gaming industry.
Industry Layoffs
Microsoft’s decision to cut jobs within its gaming division also reflects a broader trend of layoffs across the gaming industry. Companies such as Riot Games, Unity, Discord, and Twitch have also announced layoffs, signaling a significant shake-up within the sector.
In response to inquiries regarding the cancellation of Blizzard’s Odyssey project, a spokesman explained that it was part of a strategic focus on projects with higher growth potential.
Microsoft intends to redirect some employees to other early-stage projects at Blizzard, indicating a shift in the company’s priorities.
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