Microsoft Faces Criticism from FTC for Layoffs After Activision Blizzard Acquisition
The Federal Trade Commission (FTC) has publicly criticized Microsoft for its decision to lay off 1,900 employees following its acquisition of video game company Activision Blizzard in January. The regulatory body has argued that these job cuts contradict Microsoft’s previous claims that the two entities would operate separately after the merger.
According to a letter submitted to the court by the FTC, the majority of the employees affected by the layoffs were originally part of Activision Blizzard. The antitrust regulator condemned Microsoft in the letter, stating that the job cuts were “at odds with Microsoft’s claim to this Court that the two firms will run separately after the merger.”
Microsoft Gaming chief Phil Spencer had announced the layoffs in a company memo, explaining that the decision was made as part of the company’s plans for business growth in 2024. He stated, “Together, we’ve picked our goals, found where we overlap, and ensured we’re all on the same page for growth.”
This letter from the FTC to the court clerk follows calls from Sen. Elizabeth Warren for the regulatory body to scrutinize and challenge the merger. Sen. Warren has been outspoken about her concerns regarding the consolidation of power in the tech industry and has urged the FTC to closely monitor and regulate mergers and acquisitions in order to protect competition and workers’ rights.
Microsoft now faces criticism and potential consequences for not upholding its promises made during the acquisition. The FTC’s involvement in this issue underscores the need for transparency and accountability in corporate mergers, particularly when employee welfare and competition are at stake.
Analyst comment
Negative news. As an analyst, the market may react with caution to Microsoft’s actions and the FTC’s criticism. There could be potential consequences and regulatory scrutiny, leading to increased oversight of mergers and acquisitions in the tech industry. This may impact Microsoft’s reputation and future deals.
