Microsoft Says It Stands by Its ‘Representations’ to 9th Circuit on Activision Buy

Nothing in the FTC’s letter to the 9th U.S. Circuit Appeals Court Wednesday about Microsoft job cuts in its video game operations undermines “the primary reason” for the 9th Circuit to affirm the district court’s denial of the FTC’s injunction to block Microsoft’s Activision Blizzard buy, said Microsoft’s rebuttal letter Thursday (docket 23-15992). The FTC has failed to raise “a serious question as to whether Microsoft is likely to foreclose competition in the alleged console, subscription or cloud markets,” it said. The FTC’s letter told the 9th Circuit that Microsoft’s plan to cut 1,900 video game jobs “contradicts” its “representations” in the FTC’s appeal to temporarily pause Microsoft’s Activision buy pending the commission’s evaluation of the acquisition’s antitrust merits. The FTC told the 9th Circuit that Microsoft’s statements that the layoffs were part of an execution plan that would reduce areas of overlap between Microsoft and Activision is “inconsistent” with Microsoft’s suggestion to the 9th Circuit that the two companies “will operate independently post-merger.” But the FTC’s letter “provides no basis for undercutting” the district court’s denial of the injunction, said Microsoft’s rebuttal. “Moreover, the FTC’s factual assertions are incomplete and misleading,” it said. Consistent with broader trends in the gaming industry, Activision “was already planning on eliminating a significant number of jobs while still operating as an independent company,” said Microsoft. The recent announcement of 1,900 job cuts thus can’t be “attributed fully” to the combination, it said. Microsoft “continues fully to stand behind its representations” to the 9th Circuit, it said. “To be clear, while some overlap was identified and some jobs were eliminated,” Microsoft has structured and is operating the post-merger company “in a way that will readily enable it to divest any or all of the Activision businesses as robust market participants in the unlikely event that a divestiture ultimately is ordered,” it said. “This is precisely what Microsoft represented previously.”