Microsoft has countered the Federal Trade Commission’s (FTC) implications that the technology giant’s recent staff reductions in its gaming department conflict with prior statements regarding its ongoing acquisition of Activision. The FTC had expressed concerns that Microsoft’s layoffs appeared to be a part of an integration strategy, suggesting a reduction in overlaps and questioning Microsoft’s promise of post-merger operational independence for Activision.
FTC Expresses Concern Over Microsoft’s Layoff Strategy
In a recent submission to the U.S. Court of Appeals for the Ninth Circuit, the FTC argued that Microsoft’s layoffs were indicative of an “execution plan” to streamline overlapping areas with Activision, contradicting the company’s previous stance. The FTC’s letter cast doubt on the future independence of the two companies after the merger.
Microsoft Defends Its Position and Activision’s Pre-Merger Plans
Responding to these allegations, Microsoft’s legal representative, Rakesh Kilaru, presented a defense stating that the FTC’s claims were both “incomplete and misleading.” Microsoft maintained that the industry-wide trends had already placed Activision on a path to cut a substantial number of positions, independent of the acquisition. The company insisted that the layoff announcement was not solely a result of the merger.
Microsoft emphasized its commitment to its original assurances to the court, clarifying that, despite some job eliminations due to overlaps, Microsoft has arranged its post-merger operations to potentially divest Activision’s businesses as fully functional market entities if required.
Reports surfaced last month that Microsoft intended to let go of nearly 1,900 employees, impacting teams within Xbox, Activision Blizzard, and ZeniMax. Microsoft’s layoffs have raised questions about the future of gaming industry employment, as well as the implications for competition following large-scale mergers.
The corporate moves come as Microsoft continues to navigate the intricate process of acquiring and integrating Activision, a significant player in the gaming industry. The layoffs have put a spotlight on the complexities of such mega-mergers and the balance between corporate efficiency and market competition.
