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Feds Say Activision Layoffs Violate Promises Microsoft Made in Merger Deal 43

Posted by msmash from the how-about-that dept.
The Federal Trade Commission isn't happy with the outcome of Microsoft's $68.7 billion acquisition of Activision Blizzard, telling a court on Wednesday that Microsoft's recent layoffs contradict promises it made to get the merger approved. From a report: In a letter to the clerk of the Ninth Circuit Court of Appeals, the FTC criticized Microsoft for the layoff of 1,900 workers in January, which represented about 8% of its gaming division. The layoffs largely affected employees at Activision Blizzard. The antitrust regulator explained that the layoffs were "inconsistent with Microsoft's suggestion to this Court that the two companies will operate independently post-merger."

"As we move forward in 2024, the leadership of Microsoft Gaming and Activision Blizzard is committed to aligning on a strategy and an execution plan with a sustainable cost structure that will support the whole of our growing business," Microsoft Gaming chief Phil Spencer said in a memo announcing the layoffs in January. "Together, we've set priorities, identified areas of overlap, and ensured that we're all aligned on the best opportunities for growth." The letter comes two weeks after Sen. Elizabeth Warren, D-Massachusetts, urged the FTC to maintain its firm stance against the merger.
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Feds Say Activision Layoffs Violate Promises Microsoft Made in Merger Deal More

Feds Say Activision Layoffs Violate Promises Microsoft Made in Merger Deal

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  • Microsoft broke a promise? (Score:5, Funny)

    by Narcocide ( 102829 ) on Thursday February 08, 2024 @11:13AM (#64224904) Homepage

    Shocked I say, just shocked!

  • they layoff any activision blizzard union workers?

    • There are currently only a handful of places that have a union. The largely affected locations in Cork and Austin were not unionised locations.

  • Anything 'said' isn't worth the paper, or bits, it is written on. Unless it is in the actual agreement then the FTC should say they can't trust them to hold up the verbal part of the agreement. They should then deny the merger.

    • It's too late to undo the merger. This is simply evidence
      for the next time Microsoft wants a merger.

      • Re:Mergers vs FTC (Score:5, Interesting)

        by KiloByte ( 825081 ) on Thursday February 08, 2024 @11:39AM (#64224984)

        Why too late? They made an agreement, then broke it. Sure, at this point the split might cost Microsoft a bit, but that's only fair.

        It's as if a thief stolen $1000 from you, blew it on booze and hookers, and claimed that no, it's too late to return the money -- and the other $1000 he has can't be paid to you.

        • It's as if a thief stolen $1000 from you, blew it on booze and hookers, and claimed that no, it's too late to return the money -- and the other $1000 he has can't be paid to you.

          That is the EXACT logic The SCO Group used to avoid paying Novell the money SCO owed it, and the court bought the argument lock, stock, and barrel!

        • The FTC said the reasons given for the layoffs were "inconsistent" with previous statements made by Microsoft.

          According to the regulator, the tech giant said that it would run Activision Blizzard as an independent company. But the job cuts by Microsoft indicate that the gaming company is not being run independently, said the FTC.

          But Microsoft said it "continues fully to stand behind" the statements it previously made to the court.

          Phil Spencer, chief executive of Microsoft Gaming, had previously said in a memo that the layoffs were a way to reduce "areas of overlap" in its business.

          Of course, everyone knows that independent companies don't need areas of overlap. But what sort of idiot approves a merger with the caveat that the merged companies should remain independent?

          • But what sort of idiot approves a merger with the caveat that the merged companies should remain independent?

            An idiot who received a campaign donation.

    • That depends if you think everything that happened was just said verbally. I would imagine an agency like the FTC would write everything down especially if they are going to sue over it in an appeals court. Courts do not like to rely on hearsay testimonies.
      • in most of the US, there is a big difference between "Verbal Contract" and "Hearsay", the FTC, if it was part of a verbal contract, should, as a previous poster has stated, taken good notes throughout the discussions, for just such a use as this.
        • There is no verbal contract when it comes to something like merger stipulations that the FTC opposed. People seem to frame it as a civil matter between two people. When dealing with a federal agency, it is a different situation.

  • lol time for some popcorn (Score:4, Interesting)

    by snowshovelboy ( 242280 ) on Thursday February 08, 2024 @11:54AM (#64225022)

    Its going to be hilarious and sad when internal documents reveal Activision was going to lay those people off and cancel their projects anyway, merger or not. Microsoft likely did those people a kindness by not revealing the sad state of the projects they were on, attributing the layoff to corporate buzzwords rather than the utter failure of the development teams that came under the axe.

    • *Citation needed.

      Microsoft doesn't care about Activision or employees. Modern business is all about buying the competition for the IP and selling off the remaining pieces.

    • Phil Spencer, chief executive of Microsoft Gaming, had previously said in a memo that the layoffs were a way to reduce "areas of overlap" in its business.

      There were no areas of overlap before the merger, what with being separate.

      • Re: (Score:2)

        by jezwel ( 2451108 )

        Phil Spencer, chief executive of Microsoft Gaming, had previously said in a memo that the layoffs were a way to reduce "areas of overlap" in its business.

        There were no areas of overlap before the merger, what with being separate.

        And if they're being run independently as apparently submitted in the doco to the FTC, there's no areas of overlap afterwards either.

        Eventually you would expect areas of duplicate functionality to be merged and 'right-sized', but that timeframe should also be documented in the merger plan submission...

  • Looking at the layoffs in the gaming industry all round, I don't really think it had something to do with the merger, but those layoffs would have happened anyway.

    • Re:Maybe not (Score:5, Insightful)

      by quantaman ( 517394 ) on Thursday February 08, 2024 @12:58PM (#64225198)

      Looking at the layoffs in the gaming industry all round, I don't really think it had something to do with the merger, but those layoffs would have happened anyway.

      The article isn't clear but I think the argument is a bit more subtle than that.

      Rather, Microsoft said that Activision Blizzard would be independent post-merger. Then Microsoft announced layoffs largely (but not exclusively) affecting Activision Blizzard.

      But if Activision was independent then why was Microsoft announcing the layoffs? And why would layoffs happen at both companies at once? That suggests that Activision is just another division instead of the independent entity.

      There's also the fact that the layoffs mostly hit Activision, combined with the statement about "priorities [and] identified areas of overlap" also suggests Microsoft saw those employees as redundant to folks already at Microsoft or doing things they didn't want Activision doing anymore (again, not independent).

      Of course Warren really focused on the jobs as she's a politician and that's the thing that resonates for voters. But I think the core of the FTCs complaint is that Microsoft has already backtracked on its promise to keep them independent.

  • Same as the OLD Microsoft.

    Fuck M$ in their stupid pussy faces.

    • Yeah, no.

      Fark Activision and it's soulless lizzzzzard overlords for taking great IPs and turning them into a rotting pile of garbage.

      Play stoopid games. Win stoopid prizes

      MS didn't scrub enough of useless gonks

  • In a letter to the clerk of the Ninth Circuit Court of Appeals, the FTC criticized Microsoft for the layoff of 1,900 workers in January, which represented about 8% of its gaming division. The layoffs largely affected employees at Activision Blizzard. The antitrust regulator explained that the layoffs were "inconsistent with Microsoft's suggestion to this Court that the two companies will operate independently post-merger."

    "The FCT criticized." Criticized. I'm sure Microsoft executives are quaking in their boots over that criticism. The ONLY way to inflict any form of damage that registers to a company this size is not through public "bad boy" statements. It's by hitting them hard enough to have a negative impact on overall profit from whatever action has been taken and "criticized." Right now? This means absolutely nothing. It's just another time where a giant company made public statements to such and such effect, then rene

    • Re: (Score:3)

      by jezwel ( 2451108 )

      which represented about 8% of its gaming division.

      ... The ONLY way to inflict any form of damage that registers to a company this size is not through public "bad boy" statements. It's by hitting them hard enough to have a negative impact on overall profit from whatever action has been taken and "criticized.".

      Agreed - how about 8% of total revenue of the combined "independent" entities? That's enough to make everyone take notice.

  • "You said you'd remain independant!"

    "Ok, what part of cancelling a shit project and canning the redundant folks it leaves with no work isn't independant ?"

    "The ones who wrote the PR about it!"

    The FTC is just interpreting the layoffs as lack of independence. For all they know, Microsoft asked Activision to proceed at the same time to trim the fat, so they could do it in a single round rather than have 2 announcements and that was the end of the "collaboration" on lay offs with no additional input from Micro

  • I'll just put the tip in. And if you don't like it, I'll pull it right back out.

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