FTC: Microsoft said that Activision Blizzard will work independently, so why did they cut 1900 jobs?
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Key notes
- Microsoft cut 1,900 gaming jobs, raising concerns about its Activision Blizzard merger.
- FTC argues these cuts contradict prior statements and weaken their ability to impose remedies.
- Microsoft says cuts are normal integration, necessary for efficiency and competitiveness.
- The court weighs the FTC’s appeal, and the final decision will impact the video game industry and tech antitrust.
Microsoft’s recent decision to cut 1,900 jobs from its video game division, including positions at Activision Blizzard, has reignited concerns about the potential antitrust implications of its $69 billion acquisition. The Federal Trade Commission (FTC), which unsuccessfully attempted to block the deal last year, argues that the job cuts contradict Microsoft’s earlier statements about operating Activision Blizzard independently and could weaken its ability to impose effective remedies if approved.
The job cuts, announced in late January, represent an 8% reduction of Microsoft’s gaming workforce and affected employees across Activision Blizzard, Xbox, and ZeniMax studios. High-profile figures like Blizzard President Mike Ybarra and co-founder Allen Adham were also let go. Additionally, many employees developing an unreleased Blizzard game codenamed “Odyssey” were laid off after six years of work.
The FTC views these actions as evidence that Microsoft is already integrating Activision Blizzard despite ongoing legal challenges. In a letter to the 9th U.S. Circuit Court of Appeals, the agency argued that the layoffs “contradict Microsoft’s representations in this proceeding” and “undermine the FTC’s ability to order effective relief” if the merger is later found to violate antitrust laws.
Microsoft, however, maintains that the job cuts are a normal part of the post-merger integration process and do not violate any agreements or commitments made to the court. The company argues that the cuts are necessary to create a more efficient and competitive gaming business.
This latest development adds another layer of complexity to the already contentious legal battle surrounding the Microsoft-Activision Blizzard merger. The court is currently considering the FTC’s appeal, and its decision will ultimately determine whether the deal can proceed as planned or if stricter conditions need to be imposed to protect competition.
Back story: The Federal Trade Commission (FTC) filed a lawsuit in January 2022 to prevent the merger, citing concerns about unfair competition in the video game market. However, a federal judge denied the FTC’s request in March 2023, allowing the merger to proceed. The FTC challenged the ruling, leading to the case before the 9th U.S. Circuit Court of Appeals.
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