Microsoft is under scrutiny from the Federal Trade Commission (FTC) for allegedly reneging on promises made during its antitrust trial. The FTC asserts that Microsoft’s recent layoffs contradict statements made during court proceedings. These layoffs, affecting 1,900 employees, include a significant number from the recently acquired Activision Blizzard.
Microsoft’s CEO, Phil Spencer, had previously emphasized a commitment to aligning strategies and ensuring a sustainable cost structure post-acquisition. However, the FTC points out discrepancies between Microsoft’s courtroom assurances of maintaining independence for Activision Blizzard and its subsequent actions.
FTC lawyer Imad Abyad highlighted Microsoft’s intention to operate the merged entity as a “limited-integration studio,” suggesting minimal redundancy elimination and layoffs. This conflicts with Microsoft’s assertion that the layoffs were intended to reduce overlap between the companies.
Despite the completion of the $68.7 billion merger, the FTC continues to pursue legal action, seeking to reverse or undo the deal. It has appealed the merger approval and aims to pause the merger for an in-house trial. While challenging, the FTC has a history of undoing mergers, such as the Whole Foods-Wild Oats acquisition.
In response, Microsoft denies that the layoffs indicate a breach of its court commitments, stating that the layoffs were under consideration pre-merger. Additionally, Microsoft emphasizes its ability to divest Activision Blizzard assets if required, maintaining its commitment to previous representations.
Microsoft also highlights changes to the deal, including restructuring mandated by the UK competition authority and agreements with Sony regarding Call of Duty’s availability on PlayStation.
