- Microsoft and the FTC have been on bad terms regarding the Activision Blizzard merger for a long time.
- The FTC has now filed a complaint against Microsoft for failing to fulfill its promise.
- This happened after Microsoft laid off 1,900 Xbox employees, including Activision Blizzard workers.
The FTC and Microsoft have been on bad terms ever since Microsoft decided to acquire the gaming giant Activision Blizzard. After a long-lasting battle in court, Microsoft came out victorious in the end.
However, despite its initial defeat, the FTC has persisted in its efforts and has lodged a complaint against Microsoft with a federal appeals court.
Why it matters: The outcome of the legal dispute between the FTC and Microsoft could have intense implications for the gaming industry, given the scale of the Microsoft-Activision Blizzard merger and its potential impact on market competition.
The FTC alleges that Microsoft’s 1,900 layoffs at Activision Blizzard and Xbox contradicts its pledge to maintain the independence of Activision Blizzard post-merger. FTC wrote in the complaint about the layoffs:
“This newly-revealed information contradicts Microsoft’s representations in this proceeding.”
The FTC further stated that Microsoft claimed it would operate Activision Blizzard independently and divestiture wouldn’t be problematic, also promising to maintain the “pre-merger status quo” and to avoid eliminating redundancies due to the vertical nature of the merger.
However, the 1,900 job layoffs at both Activision Blizzard and Xbox seem to target “areas of overlap,” which contradicts their previous statements. The FTC is seeking an injunction from the court to block the merger and halt Microsoft from carrying out the layoffs.
The regulator argues that if Microsoft is compelled to undo the merger, divestiture might be ineffective.
For those unaware, divestiture refers to the process of selling off parts of a company to address concerns about anti-competitive practices. In this case, if the court rules for Microsoft to undo the merger, they might have to sell parts of Activision Blizzard.
Microsoft appears to be facing challenges on multiple fronts, with rumors swirling about Xbox potentially transitioning to third-party status and now the FTC filing a complaint against them.
These developments could pose significant obstacles for the company moving forward. Nevertheless, we are hopeful for the outcome and eager to see how both the court and Microsoft respond to this complaint.
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