In 2023, Microsoft was able to acquire Activision Blizzard King after trying for a very long time. There were a bunch of hurdles in their way too, namely Sony, FTC, etc. This deal didn’t come cheap either; they had to shed $68.7 billion for it. Many Xbox fans might have expected a bunch of exciting new things to follow after this deal’s closure, but the first thing that followed was a bunch of layoffs.
Microsoft has laid off around 1,900 employees from their gaming division. They claimed that these layoffs came due to some overlap. They must have thought that all that went unnoticed, but their fans and FTC are already asking questions, and Microsoft has an answer to them.
Microsoft suggests all the layoffs were in Activision’s plans even before the acquisition!
Layoffs are hard on people; there’s no doubt about it. People losing their jobs is never a good thing, but who do they blame it all on? Well, in this case, people have already started pointing fingers at the most obvious culprit, Microsoft. But it’s not just a bunch of people on the internet blaming them for these layoffs; the FTC is doing the same.
The FTC claims that during their long-drawn lawsuit regarding the acquisition, Microsoft suggested Activision would continue to operate independently post-purchase. In a letter they recently submitted to the US Federal Appeals Court, they said, “Microsoft represented to this Court that ‘the post-merger company will be structured 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.”
It looks like they did not like that “Overlap” statement made by Phil Spencer during the layoffs. They suggested that this statement is “inconsistent with Microsoft’s suggestion… that the two companies will operate independently post-merger”.
This did not sit well with Microsoft; it was as if they were expecting this to happen. They already had a statement ready, and it’s not a very surprising one either. They responded to the FTC in court by saying that Activision Blizzard Inc. already had plans to lay off workers before its merger with Microsoft Corp.
Their exact statement said, “Consistent with broader trends in the gaming industry, Activision was already planning on eliminating a significant number of jobs while still operating as an independent company.”
This does not even come as a surprise either; Activision is notorious for laying off a large number of employees every now and then. But the twist comes when one notices that not all layoffs were from Activision Blizzard alone; Zenimax and some Xbox employees were affected by this wave too.
It remains to be seen how this plays off, though. After all, Microsoft had to jump a lot of hoops just so they could acquire this mega-corporation. These layoffs were in some way planned to make the operations of their company better, but they have already started putting things at risk.
The FTC would not let it go this easily.
While Microsoft and Activision are now working hard to justify these layoffs, the FTC would do its best to once again push Microsoft into a legal battlefield. They did not take their loss last July pretty well either. After the Microsoft Activision deal was cleared by the EU, the FTC was fighting even harder.
Microsoft, on the other hand, has not even started thinking about how to utilize all that they have gotten from Activision. No doubt they have a bunch of plans, but this appeal might end up halting those plans for a little while.
