The Federal Trade Commission (FTC) filed a lawsuit in federal court on Wednesday, targeting Microsoft’s recent series of post-merger layoffs, as first reported by Bloomberg. In its filing with the U.S. Court of Appeals for the Ninth Circuit in San Francisco, the FTC argued that Microsoft’s plans to cut approximately 1,900 jobs from its various video game divisions—including companies and divisions within Activision Blizzard, which it acquired in October 2023 for around $67.8B USD—contradicted statements made in court that it would operate the company independently.
“The reported elimination of thousands of jobs undermines the FTC’s ability to order effective relief,” the watchdog agency stated in its filing. The FTC added that the merger/acquisition created “areas of overlap” concerning employees, and that the federal court should have paused the company’s integration to allow the agency to complete its trial. The appeals court is currently reviewing a lower court’s decision that permitted the merger to proceed.
The news of mass layoffs across various Microsoft divisions was announced by the company’s top gaming executive, Phil Spencer, in January. The cuts impacted divisions at ZeniMax, Activision, Blizzard, and the esports divisions for Overwatch League and Call of Duty—amounting to 8% of its gaming division’s 22,000 employees. Also affected were developers working on Blizzard’s unreleased survival game, codenamed “Odyssey”, which was ultimately canceled after six years of development.
The elimination of its esports-focused workforce has led Microsoft to shift responsibility for what remains of Activision Blizzard’s esports properties to third-party tournament production companies and organizers, such as the ESL FACEIT Group, which now runs the Overwatch League replacement Overwatch Champions Series.