The US Federal Trade Commission (FTC) has filed a complaint against Microsoft for its initiation of layoffs at Activision Blizzard, claiming they go against previously laid out terms for the company acquisition.
Per the letter filed with the US Federal Appeals Court, first spotted by The Verge, the FTC believes the layoffs contradict Microsoft’s earlier reassurances that Activision Blizzard would continue to operate independently post-acquisition, and that the “status quo” would be maintained.
The FTC claims Microsoft’s position was that “the post-merger company will be structured and operated in a way that would readily enable Microsoft to divest any or all of the Activision businesses as robust market participants in the unlikely event that such a divestiture is ordered.” In initiating layoffs, the FTC claims Microsoft has reneged on its declarations.
Essentially, the FTC believes Microsoft has rendered Activision Blizzard non-independent by targeting layoffs on “areas of overlap” within the business. Per the filing, this is “inconsistent with Microsoft’s suggestion to this Court that the two companies will operate independently post-merger.”
The FTC has further claimed these layoffs mean Activision Blizzard now lacks the ability to split from Microsoft and get “effective relief” in future administrative proceedings.
“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,” the FTC said. “The reported layoffs … underscore the FTC’s need for injunctive relief pending completion of the administrative proceeding.”
Update 9/2: In response to the filing, Microsoft has released its own statement, alleging the FTC’s filing ignores the reality of the Activision Blizzard deal. “In continuing its opposition to the deal, the FTC ignores the reality that the deal itself has substantially changed,” a Microsoft spokesperson said.
“Since the FTC lost in court last July, Microsoft was required by the UK competition authority to restructure the acquisition globally and therefore did not acquire the cloud streaming rights to Activision Blizzard games in the United States. Additionally, Sony and Microsoft signed a binding agreement to keep Call of Duty on PlayStation on even better terms than Sony had before.”
At this stage, the outcome of this complaint is unclear. While the FTC has repeatedly attempted to stop and reverse the Activision Blizzard acquisition by Microsoft, its attempts have so far been unsuccessful. Stay tuned to hear more on this latest filing.