Last January, Microsoft announced the layoff of nearly 1,900 employees in its video games division. A large-scale decision which mainly targeted Activision-Blizzard employees. Phil Spencer justified this wave of layoffs by having to reduce the areas of overlap of positions between Microsoft and Activision.
But this layoff plan could well cause Microsoft some setbacks. Indeed, the United States Federal Trade Commission (FTC) seems to think that the recent wave of layoffs announced by Phil Spencer goes against what was presented by the company at the time of the acquisition of Activision -Blizzard.
At the time of the proceedings, Microsoft presented the acquisition as a vertical merger. Thus, absorbing Activision-Blizzard should allow Microsoft to offer complementary services, which at the same time implies no duplicate positions. Activision-Blizzard should therefore have been able to retain the majority of its workforce.
By pointing out this inconsistency between Microsoft’s speech and the actions carried out by the company, the FTC therefore hopes to demonstrate that the merger carried out by the American giant was indeed a horizontal merger. A notable difference since by promising a vertical merger, Microsoft was trying to align with the FTC’s requirements. However, with a horizontal merger, the status quo is no longer preserved and concerns about a potential Microsoft monopoly in the video game landscape return in force.
It remains to be seen what consequence this FTC claim could have. Even if American antitrust law prohibits takeovers and mergers that could substantially reduce competition or tend to form a monopoly. The acquisition is already effective and going back seems complicated. The FTC, however, requests the necessary time to be able to reevaluate the acquisition.