Microsoft Denies Cutting Jobs After Activision Blizzard Purchase, US Regulators Claim
In a surprising turn of events, Microsoft has found itself at odds with US regulators over allegations that it reneged on its promise to refrain from cutting jobs following its acquisition of gaming giant Activision Blizzard. This contentious deal, which marked the largest gaming acquisition in history with a price tag of $69 billion (£56 billion), has now become the subject of scrutiny by the Federal Trade Commission (FTC).
Microsoft Gaming made headlines earlier this year when it announced 1,900 job cuts in January, just three months after finalizing the purchase. The FTC argues that this move contradicts Microsoft’s earlier assurances and raises concerns about potential antitrust implications. However, Microsoft vehemently denies any wrongdoing, asserting that the decision to downsize was not a direct result of the merger.
According to Microsoft, Activision Blizzard had already been planning significant job cuts prior to the acquisition. In a court filing obtained by the BBC, the company stated, “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.” Microsoft contends that the recent announcement of layoffs cannot be solely attributed to the merger.
The acquisition of Activision Blizzard grants Microsoft control over immensely popular games such as Call of Duty, World of Warcraft, and Candy Crush. Initially met with resistance in the UK, the deal eventually gained approval after Microsoft made certain concessions. However, the FTC is now seeking to halt the merger in order to thoroughly evaluate potential antitrust concerns. If successful, the regulator may choose to approve the merger but could also opt to split Activision Blizzard into separate entities or even block the deal entirely.
The FTC argues that Microsoft’s decision to cut jobs undermines its claim that Activision Blizzard would continue to operate independently under its ownership. The tech giant had previously assured regulators that it would maintain the gaming company’s autonomy. However, the layoffs suggest otherwise, according to the FTC. Microsoft, on the other hand, maintains that it stands by its previous statements and continues to support the notion of an independent Activision Blizzard.
In a memo released earlier, Phil Spencer, the CEO of Microsoft Gaming, explained that the job cuts were intended to address areas of overlap within the business. This move was seen as a strategic measure to streamline operations and enhance efficiency. However, reports have also emerged suggesting that Microsoft is planning a broader reorganization of its gaming division, including the possibility of releasing Xbox exclusives on rival platforms. In response to these rumors, Spencer has announced an upcoming “business update event” where he will discuss the future of Xbox.
As the legal battle between Microsoft and US regulators unfolds, the fate of the Activision Blizzard merger hangs in the balance. The outcome of this case could have far-reaching implications for both companies and the gaming industry as a whole. The FTC’s concerns about antitrust issues and Microsoft’s commitment to maintaining an independent Activision Blizzard will undoubtedly shape the final decision. Until then, gamers and industry insiders eagerly await the resolution of this high-stakes dispute.
Related Topics: Gaming, Xbox, Microsoft, Activision Blizzard