When everyone thought that the courtroom saga between Microsoft and FTC had come to an end, FTC filed a letter against Microsoft with the U.S. Court of Appeals for the Ninth Circuit earlier this week. The FTC lawyer Imad Abyad filed the letter after Microsoft announced a significant layoff of 1,900 workers from Xbox and Activision Blizzard, stating that Microsoft went back on the word they conveyed in the proceedings.
As a result of the layoffs, FTC is looking forward to continuing its fight against Microsoft over its $69 billion Activision Blizzard acquisition. Abyad pointed out how Microsoft assured that the Xbox division and Blizzard would work independently, but the recent layoffs say otherwise because the majority of the impacted workers belong to Blizzard.
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FTC Filed Letter Against Microsoft Over Its Recent 1,900 Workers Layoff
After Microsoft let 8% (1,900 out of 22,000) of its workforce go, FTC decided to go after Microsoft again. In FTC lawyer Imad Abyad's letter, he pointed out Microsoft's statements in the previous hearings, like how Activision Blizzard will work independently alongside how the merger won't require any workforce redundancy elimination in the future. Here is the statement mentioned by Abyad:
Post-merger company will be structured and operated in a way that would readily enable Microsoft to divest any or all of the Activision businesses.
In his memo about the layoffs, Phil Spencer, CEO of Microsoft Gaming, mentioned, "we've set priorities, identified areas of overlap" as one of the reasons for layoffs. FTC feels that Microsoft entered the deal in bad faith and will take these statements as the basis for its building case against Microsoft and revert the merger.
While the U.S. court hasn't said anything about FTC's letter, Microsoft wrote a letter to the U.S. Court of Appeals, where Microsoft's lawyer said:
Activision was already planning on eliminating a significant number of jobs while still operating as an independent company. The recent announcement thus cannot be attributed fully to the merger. More important, Microsoft continues fully to stand behind its representations to this Court. Microsoft has structured and is operating the post-merger company in a way that will readily enable it to divest any or all of the Activision businesses as robust market participants in the unlikely event that a divestiture ultimately is ordered.
Microsoft claims that Acitivision already planned to cut a significant number of jobs, and their recent decisions were made to ensure Acitivision Blizzard's independence in the future. Moreover, Microsoft talks about how the deal was restructured prior to the approval, including giving away the cloud gaming rights to Ubisoft and ensuring that Call of Duty stays with PlayStation. While Microsoft feels that FTC's claims are incomplete, FTC will not leave any opportunity to take on Microsoft. Both parties are waiting to hear from the U.S. Court of Appeals.
