Microsoft Responds to Antitrust Concerns from US FTC Over Activision Layoffs
Microsoft has responded to antitrust concerns raised by the US Federal Trade Commission (FTC) over the recent layoffs at Activision. The FTC alleged that the layoffs indicate that Microsoft has not maintained Activision’s “pre-merger status quo.” In a letter filed to the US Court of Appeals’ Ninth Circuit on Thursday, Microsoft’s attorney, Rakesh Kilaru, stated that the job cuts were already planned by Activision as an independent company in line with industry trends. Kilaru emphasized that Microsoft remains committed to its obligations and representations made in the court.
Microsoft Asserts Activision Layoffs Were Part of Pre-Merger Plans
According to Microsoft, the layoffs at Activision were part of the game studio’s pre-merger plans and not solely the result of the acquisition. The tech giant admits there was some overlap in staff between Microsoft and Activision, leading to employee redundancies. However, Microsoft asserts that it has structured its post-merger operations to facilitate the divestment of any or all of the Activision businesses if necessary. The company maintains that it has not violated any antitrust obligations in its handling of the acquisition.
FTC Files Correspondence Seeking Halt to Microsoft’s Activision Affairs
The US Federal Trade Commission (FTC) has filed a correspondence with the court seeking an immediate halt to Microsoft’s Activision operations. The FTC has raised concerns over the 1,900 layoffs announced by Microsoft last month, which it believes contradict the tech giant’s earlier statements made during the antitrust lawsuit. The FTC claims that Microsoft and Activision would remain separate entities with limited integration. FTC attorney Imad Abyad argues that the layoffs contradict this prior statement and should be addressed before allowing Microsoft to continue its Activision operations.
Microsoft’s Acquisition of Activision Faces Antitrust Scrutiny
Microsoft’s acquisition of Activision has faced antitrust scrutiny from the US FTC. The tech giant announced its purchase of Activision, also known as Activision Blizzard King, in January 2022. The FTC claimed that the acquisition posed antitrust violations and filed a lawsuit, which was not successful. Microsoft completed its acquisition in October 2023, purchasing the game studio for $68.7 billion.
Gaming Industry Faces Increasing Layoffs
The gaming industry has seen a significant increase in layoffs, affecting companies such as Activision, Riot Games, Unity, and Twitch. According to reports, over 10,000 game industry layoffs occurred in the previous year, with an estimated 5,900 job losses already recorded in 2024 alone. Activision’s headcount grew from 9,800 to 13,000 between 2021 and 2022 before the acquisition by Microsoft. These layoffs indicate the challenges faced by the industry and the need for companies to adapt to changing trends and market conditions.
Analyst comment
Positive: Microsoft Responds to Antitrust Concerns from US FTC Over Activision Layoffs
As an analyst, the market will likely see some short-term volatility due to the antitrust concerns raised by the US FTC. However, if Microsoft can successfully address these concerns and demonstrate its commitment to its obligations, the market should stabilize, and the impact on Microsoft’s operations and the gaming industry should be minimal.
Negative: Microsoft Asserts Activision Layoffs Were Part of Pre-Merger Plans
The market may react negatively to the antitrust allegations and the FTC’s request to halt Microsoft’s Activision operations. If the court rules in favor of the FTC, it could disrupt Microsoft’s plans and potentially lead to further scrutiny of the acquisition. The uncertainty surrounding the outcome of these proceedings could create uncertainty in the market for Microsoft.
Neutral: FTC Files Correspondence Seeking Halt to Microsoft’s Activision Affairs
The market may see some short-term volatility as a result of the FTC’s request to halt Microsoft’s Activision operations. However, the ultimate impact on the market will depend on the court’s decision and how Microsoft addresses the concerns raised by the FTC. Investors will likely closely monitor the progress of these proceedings to assess the potential implications for Microsoft and the gaming industry.
Neutral: Microsoft’s Acquisition of Activision Faces Antitrust Scrutiny
The market may have already priced in the antitrust scrutiny faced by Microsoft’s acquisition of Activision, as the FTC’s lawsuit was unsuccessful. Investors will likely continue to monitor any developments in the case, but the overall impact on the market is expected to be minimal.
Negative: Gaming Industry Faces Increasing Layoffs
The market may view the increasing layoffs in the gaming industry as a negative sign, indicating challenges and potential instability within the sector. This could lead to concerns about the overall health of the industry and the ability of companies to adapt to changing market conditions.
