Turns out that spending $69 billion in a major acquisition deal can have dire consequences on the bottom line.
Now — as cold as this may be — what’s the easiest way to massage that bottom line? Reducing payroll.
And that’s exactly the strategy that Microsoft appears to be adopting after it announced a massive round of layups that will affect 1,900 employees.
In a memo obtained by The Verge, Microsoft head honcho Phil Spencer broke the bad news to his employees.
“As part of this process, we have made the painful decision to reduce the size of our gaming workforce by approximately 1900 roles out of the 22,000 people on our team,” Spencer wrote. “The Gaming Leadership Team and I are committed to navigating this process as thoughtfully as possible.
“The people who are directly impacted by these reductions have all played an important part in the success of Activision Blizzard, ZeniMax and the Xbox teams, and they should be proud of everything they’ve accomplished here.
“We are grateful for all of the creativity, passion and dedication they have brought to our games, our players and our colleagues. We will provide our full support to those who are impacted during the transition, including severance benefits informed by local employment laws.
“Those whose roles will be impacted will be notified, and we ask that you please treat your departing colleagues with the respect and compassion that is consistent with our values.”
As The Verge notes, Microsoft just recently completed a blockbuster $68.7 billion acquisition of Activision Blizzard — the publishing titan behind iconic game franchises like Call of Duty, Diablo and World of Warcraft — back in October.
Have you ever owned any version of the Xbox?
The lead-up to that deal was rife with legal hurdles as many governing bodies (both in America and in Europe) were leery of the monopolistic implications of this purchase.
The controversial business deal even led some in Congress, like Sen. Elizabeth Warren, to chime in on the topic:
Corporate monopolies have had free rein to hike prices and harm workers, but now the Biden admin is committed to promoting competition.
I urged @linakhanFTC to scrutinize @Microsoft‘s proposed merger with @Activision & welcome this FTC action to block it. https://t.co/hX8PYQq6VB
— Elizabeth Warren (@SenWarren) December 8, 2022
Those concerns were obviously all resolved as the deal eventually went through and was finalized in October… but it’s clear the reverberations are still being felt three months later.
Apart from the approximate eight percent reduction in workforce, Microsoft will also be losing at least one key executive.
Matt Booty, president of Microsoft Gaming content and studios, announced that Blizzard president Mike Ybarra would be leaving, as well:
I have published the full memo from Matt Booty, president of Microsoft Gaming content and studios, which details the Blizzard survival game cancelation and Mike Ybarra’s departure: https://t.co/Yh9aRtaPdh pic.twitter.com/fxdixH6Sip
— Tom Warren (@tomwarren) January 25, 2024
Ybarra took to X to address the layoffs, though he did not mention anything about his personal future:
I want to thank everyone who is impacted today for their meaningful contributions to their teams, to Blizzard, and to players’ lives. It’s an incredibly hard day and my energy and support will be focused on all those amazing individuals impacted – this is in no way a reflection…
— Mike Ybarra 🎄 (@Qwik) January 25, 2024
“I want to thank everyone who is impacted today for their meaningful contributions to their teams, to Blizzard, and to players’ lives,” Ybarra posted to X. “It’s an incredibly hard day and my energy and support will be focused on all those amazing individuals impacted – this is in no way a reflection on your amazing work.”
While this round of layoffs has primarily affected the video game sector of Microsoft, the company as a whole has been cutting payroll for over a year now.
In January 2023, Microsoft laid off 10,000 employees as it scaled back many of its pandemic-era expansions.
Despite the thousands of layoffs over the last calendar year, as Reuters reports, Microsoft became just the second company to ever receive a $3 trillion valuation on Wednesday.
Tech titan Apple is the first company to hit such a lofty valuation.
