In a recent development, the Federal Trade Commission (FTC) has lodged a formal letter of complaint against Microsoft, asserting that the tech giant’s recent layoffs within its video game workforce are in direct contradiction to statements made during an antitrust trial regarding its acquisition of Activision Blizzard.
Update to this:
Microsoft has responded to FTC’s letter saying that Activision was going to make the cuts before the merger. This could also represent what Microsoft was going to do.
This may sound like an excuse, but it likely isn’t. We saw plenty of layoffs last year alone, and these few months have shown that no studio is safe from layoffs. If anything, this may actually be the truth, and the two companies just wanted to wait until after the buyout to cut people out so they wouldn’t lose market value before the purchase.
Original article:
The FTC specifically cited Microsoft’s representation to the court, emphasizing 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.” This statement is now the reason the FTC wants to review what’s been going on with the 1,900 layoffs recently announced by Microsoft (thanks The Verge).
According to the FTC’s complaint, Microsoft portrayed the layoffs as part of an “execution plan” aimed at reducing “areas of overlap” between Microsoft and Activision. This stance conflicted with Microsoft’s previous assurance to the court that the two entities would operate independently following the merger.
The commission also argued that the rumored loss of many jobs makes it hard for them to provide proper help if it turns out that Microsoft’s buyout of Activision broke the rules (the FTC named Section 7 of the Clayton Act as an example).
Microsoft completed its $69 billion takeover of Activision Blizzard on October 13, 2023, but it had to deal with a lot of scrutiny from government organizations before it could happen. The US FTC, the European Union, and the UK’s Competition and Markets Authority all looked closely at the deal. Even though it faced opposition from the FTC, the merger still happened.
The complaint letter was sent to Molly Dwyer, Clerk of Court at the U.S. Court of Appeals for the Ninth Circuit, pointing out the big difference between what Microsoft said before and what it did with the layoffs. This has led the FTC to ask for a court order to stop Microsoft from doing certain things until the administrative process is finished.
The FTC wants to deal with the claimed differences between what Microsoft said and what it did. This situation makes you think about what it means when big companies make promises during important deals and what we do when those seem broken.
Even if Microsoft is cleared and can continue without any issues, they’ve made a lasting impact on future companies. Microsoft has definitely made it harder for any other company to try something similar after this.
Comments