The recent announcement by Microsoft of 1,900 layoffs within its Xbox division, including employees from Activision Blizzard, has caught the attention of the United States government. The Federal Trade Commission (FTC) expressed concern that the layoffs contradict the way Microsoft represented itself during the buyout of Activision Blizzard. The FTC is seeking to temporarily pause the buyout deal to assess it for potential antitrust issues.
Microsoft’s $74.5 billion acquisition of Activision Blizzard has already been completed, but the FTC has raised objections to the layoff plan, suggesting that it does not align with the representations Microsoft made during the merger proceedings. Microsoft had stated that the layoffs were in “areas of overlap” between the two companies, but the FTC argued that this is inconsistent with Microsoft’s claim that the two companies would operate independently post-merger. The layoffs affected developers and staff from both Activision Blizzard and Microsoft within the Xbox division, where the team had around 22,000 employees before the cuts.
Microsoft responded to the FTC’s opposition by stating that the deal has substantially changed since the court decision and that the FTC is ignoring reality. The company pointed out that it was required to restructure the acquisition globally and did not acquire cloud streaming rights to Activision Blizzard games in the United States. Furthermore, there is a binding agreement with Sony to keep Call of Duty on PlayStation. In addition to these developments, Microsoft is considering bringing some of its games, such as Starfield, Indiana Jones, and Gears of War, to PlayStation and Nintendo, although this has not been confirmed. The company has promised to reveal more details soon.