In the wake of acquiring industry titan Activision Blizzard in what marked the largest transaction ever recorded in gaming history, Microsoft Gaming has dismissed allegations from U.S. regulators stating that the company reneged on promises by implementing job reductions.
Post its immense $69 billion (£56 billion) acquisition, finalized three months prior, the tech giant revealed in January a decision to lay off 1,900 employees.
In stark contrast to Microsoft’s previous assurances, the Federal Trade Commission (FTC) argues that these actions are at cross-purposes.
Microsoft refutes this, asserting that the layoffs were not spurred by the acquisition. As outlined in their U.S. court documents the company highlighted that the job cuts were in the pipeline before the merger, with Activision gearing up for significant staff reductions, mirroring wider industry dynamics.
The recent cutback announcement should not be solely ascribed to the merger, per Microsoft’s stance.
This contentious acquisition thrusts Microsoft into the ownership realm of blockbuster titles like Call of Duty, World of Warcraft, and Candy Crush.
Although initially facing a block in the UK, the transaction gained regulatory approval following Microsoft’s concessions.
Despite this progress, the FTC continues to seek a temporary injunction from the Court of Appeals, taking time to evaluate the transaction’s potential antitrust concerns.
The regulatory body claims that the success of its litigation could result in varied outcomes, from provisionally approving the transaction to more drastic measures, such as dividing Activision Blizzard into distinct businesses or blocking the merger in its entirety. According to the FTC, the recent layoffs complicate any potential unwinding of the merger, thus amplifying the call for an injunction.
The FTC brands the rationale behind the layoffs as “inconsistent” with Microsoft’s prior commitments, pointing to earlier statements where the tech behemoth indicated it would operate Activision Blizzard autonomously. Microsoft counters that it “continues fully to honor” all the assertions previously made to the court.
Microsoft Gaming’s CEO, Phil Spencer, had communicated in an internal memo that the job cuts aimed to minimize redundancies within the business.
Buzzing in the industry speculates on Microsoft’s broader gaming division restructuring, with hints that Xbox exclusives might be shared with competing platforms.
Addressing this speculation, Spencer has indicated a forthcoming “business update event” aimed at sharing insights “into the future of Xbox.”