Both the FTC and the lawyers behind the so-called "Gamers' lawsuit" against Microsoft over the acquisition $68.7 billion acquisition of Activision Blizzard have denounced the recent wave of layoffs enacted by the company to further their cases.
As reported by Gamesfray on X (formerly Twitter) the FTC sent a letter to the U.S. 9th Circuit Court of Appeals which is currently in the process of ruling on the regulator's appeal against a federal court's decision to deny a preliminary injunction against the acquisition.
According to the FTC, the plan to lay off approximately 1,900 employees within its game divisions contradicts Microsoft's representation to the court that they would operate Activision as a limited-integration company, since the layoffs are intended to reduce overlap between the two companies.
Furthermore, the regulator alleges that the elimination of thousands of jobs would undermine the FTC's ability to order a divestiture of Activision Blizzard should they prevail in the ongoing administrative proceeding.
Gamesfray also reports that the law firms behind the so-called "gamer's lawsuit" are preparing to file a request with the United States District Court for the Northern District of California for a temporary restraining order that would "stop Microsoft from firing the remainder of Activision employees."
According to the law firms, this TRO would be required to "stop the destruction of Activision through layoffs." They argue that, should they prevail in their lawsuit, Activision must be able to be spun off and continue to compete in the market as the most successful and largest independent AAA game publisher.
If you're not familiar with the lawsuit in question, it has been somewhat improperly called "Gamers' Lawsuit" by the media echoing the claims of their promoters, the San Francisco-based Joseph Saveri Law Firm and Alioto Law Firm. Of course, it doesn't represent gamers as a whole, but a very small number of self-identified "consumers of video games."
We're using that definition here strictly within quotation marks as our readers are likely familiar with it.
At the moment of this writing, neither of the two actions has received a response from the respective courts.
Update 2/8/2024: Microsoft has responded to the FTC's letter with its own. You read all about it in our dedicated article.
While the the acquisition has been closed, technically both lawsuits could seek to undo it via a divestiture if they prevailed, albeit the legal standard required to achieve this goal would be very demanding.
In the meanwhile, Microsoft will host an event next week in which it'll share its vision for the future of Xbox. Since this is possibly tied to the exclusivity of certain games, it might yet affect this legal battle.
At the end of January, Microsoft announced a plan to lay off approximately 1,900 employees from its gaming divisions, with a reported focus on Activision Blizzard to achieve a "sustainable cost structure that will support the whole of their growing business."
Massive layoffs have been enacted between the second half of 2023 and the beginning of 2024 across the gaming industry, affecting companies of all sizes including Sony, Bungie, 2K Games, Epic Games, Tencent, Amazon, Frontier, Team17, People can Fly, and many more, on top of several of Embracer's studios.
