Activision was planning job cuts before acquisition, Microsoft tells FTC

The recent layoffs at Microsoft have caught the attention of the FTC as the decision to let employees go contradicts the company's court statements during the Activision Blizzard acquisition.

Microsoft has since responded to the FTC’s claims, stating that Activision planned job cuts before they were acquired.

The FTC believed recent Microsoft layoffs could contradict court claims

In January 2023, Microsoft revealed plans to cut 1900 jobs across Xbox, Bethesda and Activision Blizzard, seeing 8% of the company's 22,000 employees out of work.

Several studios including Toys 4 Bob and Sledgehammer Games 

In a complaint filed on Wednesday this week, the FTC stated that it believed these layoffs could go against statements made in court during the Activision Blizzard merger trial.

The complaint letter said: “This newly-revealed information contradicts Microsoft’s representations in this proceeding, which seeks to temporarily pause Microsoft’s acquisition of Activision pending the FTC’s evaluation of the merger’s antitrust merits.

“Microsoft’s recently-reported plan to eliminate 1,900 jobs in its video game division, including in its newly-acquired Activision unit, contradicts the foregoing representations it made to this Court.

“Specifically, Microsoft reportedly has stated that the layoffs were part of an “execution plan” that would reduce “areas of overlap” between Microsoft and Activision, which is inconsistent with Microsoft’s suggestion to this Court that the two companies will operate independently post-merger.”

Microsoft has responded to claims by the FTC that it went against statements made in court 

In response to the claim by the FTC, Microsoft issued its own letter refuting that the layoffs were against their court statement.

In a letter shared online, Microsoft’s lawyers claimed that Activision Blizzard intended to implement job cuts regardless of whether or not the acquisition went through. 

Citing wider industry layoffs as evidence for this claim, the letter said: “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.

“The recent announcement thus cannot be attributed fully to the merger.

“More important, Microsoft continues fully to stand behind its representations to this Court.

“To be clear, while some overlap Was identified and some jobs were eliminated, Microsoft has structured and is operating the post-merger company in a way that will readily enable it to divest any or all of the Activision businesses as robust market participants in the unlikely event that a divestiture ultimately is ordered.

“This is precisely what Microsoft represented previously.”

The complaint by the FTC is understandable given that the layoffs came so soon after Microsoft spent over $75 billion dollars on the acquisition of Activision Blizzard.

While Microsoft has stated otherwise, several people previously questioned on social media whether this high cost had anything to do with the decision to reduce staff, however this was just speculation.

It is unknown whether anything will come of the FTC’s complaint however it is clear that Microsoft is willing to defend itself in this case.