(Credit: Getty Images/Anadolu Agency/Hakan Nural.)
In response to FTC concerns that Microsoft has not maintained Activision's "pre-merger status quo" with recent layoffs, Redmond tells the agency that Activision was already planning on cutting jobs before the merger went through.
"Consistent with broader trends in the gaming industry, Activision was already planning on eliminating a significant number of jobs while still operating as an independent company," Microsoft attorney Rakesh Kilaru said in a letter filed with the US Court of Appeals' Ninth Circuit on Thursday.
"The recent announcement thus cannot be attributed fully to the merger. More important, Microsoft continues fully to stand behind its representations to this Court," Kilaru continued.
While Microsoft admits that "some overlap was identified" when it bought Activision, leading to some staff being laid off due to redundancy, Microsoft still believes that it "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" if needed in the future, according to Microsoft's letter.
The FTC filed its initial correspondence with the court on Wednesday, seeking an immediate halt to Microsoft's Activision affairs until its concerns around the 1,900 layoffs announced last month were addressed. FTC attorney Imad Abyad argued that the layoffs contradict Microsoft's prior statements made during its antitrust fight that Microsoft and Activision would remain largely separate, with the latter operating as a "limited-integration studio."
Microsoft first announced it would buy Activision, also known as Activision Blizzard King—which itself is a conglomerate of more than three game studios—in January 2022. But the FTC claimed the acquisition posed antitrust concerns, and filed a lawsuit it eventually lost. Microsoft finalized its acquisition in October 2023, buying the game studio for a staggering $68.7 billion.
Like many tech and gaming firms, Activision's headcount spiked from 2021 to 2022, going from 9,800 to 13,000 by the end of 2022, Game File reports. When previously asked about possible layoffs or changes resulting from its pending Acquisition purchase in early 2022, Microsoft's Xbox boss Phil Spencer reportedly said: "When I think about the teams that we can bring on, I need to support them and give them safety and a sense of confidence that they can go and innovate."
So far, 2024 isn't shaping up to be a year with fewer layoffs, unfortunately. Last year brought over 10,000 game industry layoffs, according to one tracker. But an estimated 5,900 have already lost their jobs this year alone, with Activision, Riot Games, Unity, and Twitch among the firms making the biggest cuts.