The Federal Trade Commission (FTC) has accused Microsoft of reneging on commitments made during its antitrust trial by laying off 1,900 employees, as revealed in a letter filed by FTC lawyer Imad Abyad to the U.S. Court of Appeals for the Ninth Circuit.
Layoffs Amidst Contradictory Assurances
On January 15, Microsoft announced the layoff of 1,900 workers from its gaming division, constituting approximately 8% of that segment. Notably, a significant portion of these layoffs affected employees from the recently acquired Activision Blizzard, with public records indicating that at least 899 of the affected individuals were based in California.
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In response to the layoffs, Microsoft CEO Phil Spencer emphasized a commitment to developing a sustainable cost structure to support the company’s growth. However, Abyad highlighted discrepancies between these actions and previous assurances during the FTC hearings.
Discordance with Court Statements
Abyad’s letter pointed out that during the FTC hearings, Microsoft had assured the court of maintaining independence between itself and Activision Blizzard. Specifically, Microsoft stated that any post-merger restructuring could facilitate divestment of Activision businesses. The recent layoffs seem inconsistent with this assertion.
Furthermore, Abyad noted contradictions between Microsoft’s statement about reducing “areas of overlap” through layoffs and its earlier claims of intending to preserve the pre-merger status quo.
FTC’s Appeal and Microsoft’s Response
Despite completing the $68.7 billion Microsoft-Activision Blizzard merger, the FTC continues to contest the deal, seeking to halt or reverse it. The recent layoffs are a focal point in the FTC’s argument, complicating the prospect of effective relief should the appeal succeed.
In response, Microsoft countered the FTC’s accusations, asserting that the layoffs were part of pre-existing considerations unrelated to the merger. Microsoft maintains its commitment to the representations made in court, emphasizing its readiness to divest Activision businesses if necessary.
Additionally, Microsoft highlighted changes to the merger, including restructuring mandated by UK competition authorities and agreements with Sony to ensure continued access to Activision Blizzard games on PlayStation platforms.
Despite Microsoft’s rebuttal, the San Francisco Court of Appeals has yet to announce a decision on the matter.
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