The FTC Believes Microsoft Isn’t Allowed to Lay Anyone Off (Premium)

The U.S. Futile Trade Commission (FTC), er, Federal Trade Commission, is at it again: And you're not going to believe its latest hissy fit. This ridiculous regulatory body believes that Microsoft's $69 billion Activision Blizzard acquisition was contingent on the software giant promising not to lay off any of the 10,000 people previously employed by that company. Not one of them.
"Microsoft’s publicly reported plan to eliminate 1,900 jobs in its video game division ... contradicts Microsoft’s representations in this proceeding, which seeks to temporarily pause Microsoft’s acquisition of Activision pending the FTC’s evaluation of the merger’s antitrust merits," the FTC writes in a new legal challenge. "Microsoft represented to this Court that 'the post-merger company will be structured and operated in a way that would readily enable Microsoft to divest any or all of the Activision businesses as robust market participants in the unlikely event that such a divestiture is ordered'."
Here's what that means.
Microsoft completed its $68 billion acquisition of Activision Blizzard in October 2023 after having cleared two major legal hurdles, one in the U.S. and one in the UK. The FTC was responsible for Microsoft's issues in the U.S., but its evidence-less arguments were easily defeated in court, not once, but twice. Then, in an unexpected move, the FTC revived its internal proceeding against Microsoft, something it had never done after losing a case in federal court. And it's been bitching about Microsoft ever since.
According to the FTC, Microsoft promised the federal court that defeated the FTC that it would structure the combined Microsoft/Activision Blizzard in such a way that it could be easily unwound should a future ruling order Microsoft to divest itself of Activision Blizzard. But Microsoft instead created a new Microsoft Gaming division that comprises the 10,000 employees who came to it in the acquisition and another 12,000 people who were already employed within Xbox at Microsoft. And then it announced last month that it was laying off 1,900 of these employees, or 8 percent of them.
Any layoff is painful. But surely, it's understandable, predictable, and inevitable that there will be redundancies when you combine two businesses. And that the acquirer would have to eliminate some employees, ideally sticking with the best employees from the combined companies. And in the scope of things, 8 percent doesn't seem unreasonable. Indeed, as part of its most recent earnings announcement, Microsoft explained recently that the cost of operating its gaming business is now 38 percent higher than it was before the acquisition.
The FTC doesn't seem to understand that. Indeed, the FTC seems to believe that Microsoft's acquisition of Activision Blizzard is conditioned on it not laying off any employees. That's unreasonable. Especially since the layoffs include a mix of former Activision Blizzard and Microsoft employees.
"Microsoft claim...