Summary
- Microsoft's recent layoffs and violations of promises to the FTC could lead to potential consequences for its merger with Activision Blizzard.
- The FTC is attempting to halt or reverse the merger, despite its completion in October 2023.
- FTC lawyers state Microsoft has contradicted multiple claims prior to the merger including the need for layoffs as well as keeping Activision Blizzard operating independently.
Microsoft is running afoul of the Federal Trade Commission after the company laid off nearly 2,000 employees late last January, seemingly violating promises it had made to the agency about how it would operate once it had fully merged with Activision Blizzard. The FTC looks to be trying to stop or even undo the merger, which pushed Microsoft into becoming a $3 trillion corporation despite recently layoffs.
Microsoft and Activision Blizzard shocked the gaming world in 2022 when the former announced a move to acquire the popular developer and publisher, known for iconic franchises such as Warcraft, Call of Duty, Starcraft, and Diablo. The monumental deal was completed in October 2023 and was the latest acquisition of a big game studio following Microsoft's 2021 purchase of ZeniMax Media, the parent company of Elder Scrolls and Fallout developer Bethesda Softworks. Seemingly as a result of this merger, Microsoft ended up firing around 1,900 employees from its gaming division in January 2024, at least 899 of which were from Activision Blizzard.
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Why Is The FTC Still Going After Microsoft?
In a letter FTC lawyer Imad Abyad filed with the court on February 7, the agency claimed that Microsoft contradicted claims it had made saying that, essentially, it would not need to do major layoffs after the merger. Microsoft CEO Phil Spencer said at the time that the unified company was "committed to aligning on a strategy and an execution plan with a sustainable cost structure that will support the whole of our growing business," seemingly allaying fears of massive cuts, which are unfortunately expected when two corporations merge.
Part of this commitment to a sustainable business was the claim that Microsoft and Activision Blizzard would continue to operate independently, so as not to disrupt processes that lead to both companies' respective winning formulas. With the numerous retrenchments and even a Blizzard game being canceled in development, it's since become clear that that hasn't been the case.
While it seems that there's not much the FTC can do about this situation since the merger between Microsoft and Activision Blizzard is already finished, the agency is hoping it can still undo the deal somehow. It appealed the court's decision approving the acquisition back in December 2023, but the judge hasn't ruled in their favor yet, making stopping the proceedings look like a long shot. Still, the agency feels like it's worth trying, as it has a track record of succeeding with other companies in the past.
Meanwhile, the gaming side of Microsoft is embroiled in other issues. Rumors are swirling of exclusive Xbox titles potentially heading to PlayStation and Nintendo consoles, angering hardcore loyalists. Spencer is looking to address these rumors in a business update event set for next week but did not deny them just yet, leaving the possibility of multiplatform Xbox titles very open.