Microsoft has responded to a US Federal Trade Commission (FTC) complaint about the recent layoffs in its video game division. The company argued that Activision itself had planned to make the cuts long before the acquisition.

Microsoft responds to FTC, saying Activision planned to eliminate "significant number of jobs" before acquisition

On February 7, the FTC filed a complaint in a federal appeals court that Microsoft’s decision to lay off 1,900 employees in its gaming division contradicts its suggestions in court that Activision Blizzard would operate independently post-merger.

Earlier this week, it was revealed that nearly half of the announced cuts will affect Activision Blizzard. At least 899 employees will be laid off next month across divisions including Blizzard Entertainment, Toys For Bob, Infinity Ward, and Sledgehammer Games.

The FTC argued that Microsoft’s statement that the layoffs were part of an “execution plan” to reduce “areas of overlap” between the companies goes against its previous representations. The agency added the job cuts underscore its need for “injunctive relief pending completion of the administrative proceeding.”

Microsoft lawyers today responded to the complaint, stating that Activision “was already planning on eliminating a significant number of jobs while still operating as an independent company.” Thus, Microsoft’s 1,900 layoffs cannot be attributed fully to the acquisition.

Game journalist Stephen Totilo called this argument “plausible.” He noted that while Activision Blizzard’s headcount jumped from 9,800 employees at the end of 2021 to 13,000 at the end of 2022, the company began to “undershoot growth targets.” So it is likely that Activision management planned job cuts before the deal with Microsoft closed.

The FTC initially filed an antitrust lawsuit to block Microsoft’s acquisition of Activision Blizzard in December 2022. This resulted in a public court battle involving tons of documents about the gaming businesses of Microsoft and Sony, as well as testimonies from executives like Bobby Kotick, Jim Ryan, and Phil Spencer.

In July 2023, Microsoft won the case, also committing to keep Call of Duty on PlayStation for at least 10 years on parity with Xbox. Although the FTC promised to continue its antitrust crusade against the company, the deal was eventually closed last October.

Got a story you'd like to share? Reach us at [email protected]