The FTC has decided to put Microsoft in the bureaucratic naughty corner after Microsoft decided to lay off 1,900 employees from its gaming division, a move the FTC says contradicts Microsoft’s commitment to maintaining the studio’s operational independence while the FTC pursues its case against the merger.
In October 2023, Microsoft moved to complete its takeover of Activision Blizzard after the UK’s Competition and Market Authority approved the deal.
However, this wasn’t the end of the drama because, in the US, the FTC moved to block the takeover; however, when their request for a temporary injunction against it was denied, Microsoft moved ahead with the takeover even though the FTC hadn’t given it the green light.
This means if the FTC prevails in their case against Microsoft, which is very much still ongoing, Microsoft would have to un-acquire Activision Blizzard because it has completed the merge without approval. However, Microsoft hit back at this by saying having to go back on the merger would be no biggie.
In Microsoft’s own words:
“The post-merger company [Activision-Blizzard] will be structured independently and operated in a way that would readily enable Microsoft to divest any or all of the Activision businesses as robust market participants in the unlikely event that such a divestiture is ordered.”
And that’s where the story came to an end, up until Microsoft decided to lay off nearly 2,000 employees, which now has the FTC calling Microsoft out in a letter to the Ninth Circuit Court of Appeals:
“This move by Microsoft contradicts the foregoing representations it made to this court.
Microsoft 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.
Moreover, the reported elimination of thousands of jobs undermines the FTC’s ability to order effective relief should the pending administrative proceeding result in a determination that Microsoft’s acquisition of Activision violated Section 7 of the Clayton Act.”
The FTC has also brought up that since the acquisition, Microsoft made multiple Bethesda games exclusive to Xbox despite the assurances it had given European antitrust authorities that it had no incentive to withhold games from rival consoles.
But now I want to know your thoughts on this seemingly endless mess. Let me know in the comments.