Microsoft’s Acquisition of Activision Blizzard Faces Continued Opposition from FTC
In continuing its opposition to the deal, the FTC ignores the reality that the deal itself has substantially changed. 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.
Microsoft Responds to FTC’s Complaint on Layoffs
Microsoft recently announced that it is cutting 1900 jobs in its video games division, including in the teams of Activision Blizzard video game company that the company acquired in a $68.7 billion deal. The US Federal Trade Commission (FTC) complained to a federal appeals court about this layoff, saying the development contradicts its statement in court as it fought to acquire the Call of Duty maker. Microsoft has now responded by noting that Activision was already planning ‘significant’ layoffs. “Activision was already planning on eliminating a significant number of jobs while still operating as an independent company,” said Microsoft lawyers in a new filing.
The FTC Appeals District Court’s Decision
The FTC, meanwhile, is appealing a district court’s decision not to block Microsoft’s acquisition of Activision Blizzard.
Microsoft’s Statement on the Layoffs
Microsoft spokesperson Becca Dougherty released a statement on the FTC’s filing, emphasizing the job cuts at Microsoft’s gaming divisions. Employees in Microsoft’s gaming division were informed about a significant restructuring in late January, with CEO Phil Spencer announcing an 8% workforce reduction across three studios: Activision Blizzard, Xbox, and ZeniMax (acquired in 2021). This move marked the largest gaming industry layoffs in January, surpassing similar cuts at companies like Riot Games, Unity, Discord, and Twitch. Notably, Blizzard President Mike Ybarra and co-founder/chief design officer Allen Adham were also let go. The job cuts impacted various departments within Activision Blizzard, including the esports division and Toys for Bob studio. Employees working on the unreleased “Odyssey” survival game, in development for six years, were also affected.
Outlook for Microsoft’s Gaming Division
With the ongoing opposition from the FTC and the recent layoffs, the future of Microsoft’s gaming division remains uncertain. However, the company’s acquisition of Activision Blizzard, along with the agreement with Sony to keep Call of Duty on PlayStation, positions Microsoft in a strong competitive position in the gaming industry. The restructuring and job cuts may be necessary steps for the company to align its operations with its long-term goals and ensure the success of its gaming division in the rapidly evolving market.
Analyst comment
Overall, the news is mixed for Microsoft’s acquisition of Activision Blizzard. The ongoing opposition from the FTC and the recent layoffs create uncertainty for the company’s gaming division. However, the acquisition and the agreement with Sony to keep Call of Duty on PlayStation position Microsoft competitively. The restructuring and job cuts may be necessary for long-term success in the rapidly evolving market. Market response will depend on the progress of the FTC appeal and Microsoft’s ability to navigate the challenges ahead.
