A member of the USA’s Federal Trade Commission has filed a letter of complaint against the merger of Activision-Blizzard into Microsoft, arguing that the 1,900-staffer layoff in late January goes directly against the arguments made by the merging corporations. The merger was formally closed this October at a $69 million price tag.
“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,” FTC lawyer Imad Abyad writes in the letter.
In short, Microsoft claimed that since Activision-Blizzard was its own independent entity within the larger corporation, keeping a “premerger status quo.” Therefore, in theory, there wouldn’t be any redundancies as a result of the merger, reducing the need for layoffs overall. However, that brutal 1,900-person layoff late last month included many staff within Activision Blizzard, claiming “areas of overlap” between the newly-acquired company and Microsoft’s own gaming division.
The argument is that the proponents of the merger were deceptive, with this situation more closely replicating a “horizontal merger” that typically does create redundancies and invoke these sorts of layoffs. The letter further discusses that the layoffs with this timing make relief for these staffers difficult should antitrust law be necessary to invoke.
Microsoft and Activision-Blizzard pushed back on the FTC’s claims in a letter to the FTC, as well as in statements to several publications.
"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," Activision-Blizzard wrote in direct response to the FTC. "The recent announcement thus cannot be attributed fully to the merger."
A Microsoft spokesperson also sent a statement to several publications, writing: “In continuing its opposition to the deal, the FTC ignores the reality that the deal itself has substantially changed.” The statement also discusses that cloud streaming rights were not acquired, and Sony keeps the rights to publish famous franchise Call of Duty on “even better terms than Sony had before.”
It’s rare, though not impossible, to roll back a merger of this scale in some manner. In 2017, Whole Foods was found to be in violation of FTC antitrust laws in acquiring Wild Oats, and the corporation was ordered to divest from the 32 stores it acquired.