Microsoft announced significant layoffs at Activision, affecting approximately 8% of Microsoft's gaming division, which has about 22,000 employees.

Microsoft Clapping Back on FTC's Assertions

The U.S. Federal Trade Commission (FTC) criticized Microsoft for laying off 1,900 employees from Activision Blizzard and Xbox, asserting contradictions on earlier antitrust trial assurances. Microsoft rebutted, claiming that Activision had plans for layoffs before Microsoft's acquisition, costing $68.7 billion.

In a statement, Microsoft said that Activision was already planning significant job cuts while operating as an independent company, so the layoffs can not be blamed entirely on the merger, criticizing FTC's assertions as incomplete and misleading, reported by The Verge.

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The filing mentioned that Activision had already planned layoffs, which align with trends affecting the gaming sector, such as Sega Sammy Holdings Inc. and CI Games, showing broader challenges in the industry.

Layoffs Due to Identifying Overlaps and Sustainable Cost Structure

Microsoft had previously mentioned in Phil Spencer's memo that the layoffs were because of identifying overlaps and the need for a sustainable cost structure, where the company initially announced the 1,900 layoffs in its gaming department last month.

The tech giant stated its preparedness to reverse the acquisition in the court filing. According to Game Rant, a company representative clarified that the deal permits divestment from Activision if needed, although such a situation is considered unlikely.

FTC's Objections on Antitrust Issues

The FTC's objections mainly focus on antitrust issues rather than workforce protections, raising doubts about whether recent layoffs across Activision subsidiaries would impact court approval of the acquisition.

The FTC appeals against the court's decision not to block the acquisition. A Microsoft spokesperson told The Verge that the FTC is ignoring that the deal has changed significantly in pursuit of the deal's opposition. Since the FTC lost in court last July, Microsoft was required by the U.K. competition authority to restructure the acquisition globally and, therefore, did not get the cloud streaming rights to Activision Blizzard games in the United States.

The spokesperson also mentioned that Sony and Microsoft signed a binding agreement to ensure Call of Duty remains on PlayStation under better terms than before.

Lay Off Affecting 8% Of Microsoft's Gaming Division

As stated by Microsoft Gaming CEO Phil Spencer in an internal memo, around 8% of Microsoft's gaming division, which has approximately 22,000 employees, will be affected by these latest job cuts.

In an X post, Activision Blizzard's President, Mike Ybarra, also left the company, thanking everyone impacted by the layoffs, acknowledging their contributions, and expressing support by offering any help he could give, such as connections and recommendations.

Ybarra expressed gratitude to the Blizzard community for the opportunity to lead the company during an extraordinary period and to help shape its future. Having spent over 20 years at Microsoft and with the completion of the Activision Blizzard acquisition, he stated it was time for him to step down and support Blizzard as an enthusiastic outsider. Ybarra thanked the incredible teams at Blizzard for their dedication and talent and encouraged them to "continue to do incredible things and always keep Blizzard blue and the player at the forefront of every decision."

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