Microsoft has robustly countered allegations from US regulators that it reneged on commitments by implementing job reductions following its landmark acquisition of Activision Blizzard. The tech giant's gaming division, Microsoft Gaming, announced a significant decrease of 1,900 positions in January. This move occurred merely three months after finalizing the acquisition, valued at $69 billion (£56 billion), setting a record as the most substantial deal in gaming history.
The Federal Trade Commission (FTC) has criticized the job cuts, suggesting they contradict Microsoft's prior assurances. However, Microsoft maintains that the layoffs did not directly result from the acquisition. In a court filing observed by the BBC, Microsoft argued, "Activision was already planning on eliminating a significant number of jobs while still operating as an independent company," indicating that the current job cuts align with broader gaming industry trends and should not be solely attributed to the merger.
This merger has granted Microsoft control over several popular gaming titles, including Call of Duty, World of Warcraft, and Candy Crush, stirring controversy and regulatory attention. While the deal initially faced a block in the UK, it subsequently received approval after Microsoft agreed to certain concessions. Nevertheless, the FTC is pursuing a halt to the deal in the Court of Appeals to explore potential anti-trust issues further.
The FTC is concerned that the layoffs complicate the possibility of reversing the merger if it prevails in its legal challenge, emphasizing the urgency for an injunction. The regulator has also flagged inconsistencies in Microsoft's rationale for the job cuts, pointing to previous statements indicating Activision Blizzard would operate autonomously post-acquisition. The FTC argues that the layoffs suggest otherwise.
Despite these challenges, Microsoft stands firm on its previous statements to the court. Phil Spencer, the chief executive of Microsoft Gaming, explained in a memo that the layoffs aim to eliminate "areas of overlap" within the business, suggesting a strategic alignment rather than a breach of promise.
Amidst this regulatory drama, there are whispers of a broader reorganization within Microsoft's gaming operations, potentially affecting the exclusivity of Xbox games. In response to these speculations, Spencer has announced an upcoming "business update event" to discuss Xbox's future direction, signalling Microsoft's proactive stance in addressing concerns and charting the course for its expanded gaming empire.