Microsoft has entered into another dispute with the US Federal Trade Commission (FTC) regarding the acquisition of Activision Blizzard. This time, after dismissing nearly 2,000 employees from the gaming company, the organization on Wednesday (07) alleged discrepancies in the promise of major technology companies to allow Activision Blizzard to operate independently. The FTC called for a temporary halt to the takeover while it investigates new antitrust issues.
Federal Trade Commission vs. Activision Blizzard acquisition
The FTC had already denied Microsoft's acquisition of Activision Blizzard before, until the big tech company reworked the proposal and was free to go ahead with the deal.
One of the arguments in favor of the acquisition is that Microsoft will treat the new company as a vertical acquisition, which will operate independently and, therefore, will not require restructuring and layoffs.
Now the committee accuses Microsoft of not fulfilling its promise. This is because in the last week of January, the company confirmed the layoffs of 1,900 employees from Activision Blizzard and Xbox, which is about 8% of the total gaming division. Hey Digital look I reported this issue here.
Until the FTC can investigate the case, the takeover is on hold.
What Microsoft says
- Microsoft claimed that the cuts were in “areas of overlap” between the two companies. The FTC responded that the “overlap” arguments were inconsistent with Big Tech's commitment to allowing the two companies to operate separately after a merger.
- Microsoft responded again on Thursday (08) saying the regulator had not provided evidence of harm caused by the Activision Blizzard acquisition.
- The letter states that the layoffs are “consistent with broader trends in the gaming industry” and that Activision itself was already planning to cut a significant number of jobs while still operating as an independent company. So last month's layoffs aren't entirely the merger's fault.
- In response to the site the endMicrosoft also said it had restructured its takeover bid after struggles with the UK regulator, which resulted in it not acquiring cloud services from Activision Blizzard in the US.
- Therefore, the FTC “will ignore the fact that the agreement itself has changed.”
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