Michel Euler/AP Photo
New layoffs directly follow a protracted court battle that the Federal Trade Commission lost last year to block the merger between Microsoft and Activision Blizzard.
Microsoft announced a new round of layoffs on Thursday, handing out the proverbial pink slips to 1,900 employees in its gaming division. Those job cuts come a year after another mass layoff of 10,000 workers at the beginning of 2023, and three months after the company finalized its $68 billion merger with Activision Blizzard.
This most recent round of layoffs, affecting workers at Activision Blizzard along with Xbox and ZeniMax, highlights an obvious truth gleaned from the past several decades of economic trends in America: Industry concentration, often lauded in the name of productive efficiency, inevitably leads to downsizing measures that kneecap labor. In fact, business groups will say openly that it’s the entire point.
The layoffs directly follow a protracted court battle that the Federal Trade Commission lost last year to block the merger between Microsoft and Activision Blizzard, on the grounds that it would reduce competition in the gaming industry. The FTC did note that the deal would harm workers by enhancing the monopsony power of Microsoft over an overwhelmingly non-unionized labor market, without collective bargaining as a check on management. While the FTC’s loss received resounding derision from the business press, this labor concern now appears prescient, though it was not the primary subject of the court case. Both Sens. Elizabeth Warren and Sherrod Brown sent letters to the FTC at the time urging a greater emphasis in the lawsuit on the labor impacts.
Union organizing has been on the rise across the tech and video game industries in recent years, but the sector only has a handful of shops that have won union elections so far. Three are within Microsoft’s umbrella at ZeniMax, Raven, and also a Blizzard studio in Albany, each represented by the Communications Workers of America (CWA).
The FTC was forced to square off against CWA, which endorsed the merger. The reason is that the CWA leadership struck a labor neutrality agreement with Microsoft, meaning that management pledged not to interfere with union organizing inside the company. As part of the agreement, Microsoft also agreed to an expedited card check process for unionizing, mediated by a neutral third party, rather than through a formal NLRB-officiated election.
These were legitimate gains for CWA, and unions exist to bargain for benefits for their members. When the merger was approved, CWA president Claude Cummings Jr. heralded it as “a new day for workers at Activision Blizzard.”
But this week’s layoffs magnify the trade-offs for unions after backing mergers, given that one of their major selling points to investors is to reduce the overall workforce. While the workers remaining have a path to a voice on the job, there are fewer of them left to enjoy those benefits.
Marshall Steinbaum, an economics professor at the University of Utah who’s been critical of union support for large corporate mergers, put it more bluntly: “This shows it was a mistake for CWA to support the merger.”
Industry concentration, often lauded in the name of productive efficiency, inevitably leads to downsizing measures that kneecap labor.
In a statement on the job losses, a CWA spokesperson said: “Today’s announcement underscores the importance of having a union voice on the job. With a union, employers are required to negotiate over the impact of layoffs. While CWA-represented members at ZeniMax, Raven, and Blizzard Albany will not be impacted by these cuts, we are heartbroken that the lives of so many dedicated and talented video game workers will be disrupted.”
There are currently about 400 unionized employees between Raven, Blizzard Albany, and ZeniMax studios.
CWA saw the Microsoft agreement as a historic step toward creating inroads for unions inside what is now the largest gaming company in the United States, and second in the world behind China’s Tencent. It may yet prove successful, but at a cost to the structure of the industry for all workers, including Microsoft’s reduced workforce and the rivals who find it difficult to compete.
Though the union holds that the agreement Microsoft made to get CWA’s support for the merger is legally enforceable, that’s yet to be tested under current labor law.
CWA has experience dealing with companies that reneged on their pledges of neutrality. In the early 2000s, CWA ran an organizing drive at Verizon that led to workers at the wireless division going on strike over working conditions. As a concession, Verizon agreed to be neutral going forward and even included a card check provision. Verizon then proceeded to continue union busting, and CWA decided to focus their attention on other divisions of the telecom giant. As CWA organizer Tim Dubnau concluded years later based on that incident: “Neutrality doesn’t mean anything because labor law is so broken.”
Microsoft may prove to be more willing to honor the CWA agreement, but in the short term those measures cannot protect against the carnage inflicted on the non-union members of the workforce who were let go. The legacy of the merger so far has been mass layoffs. Meanwhile, Bobby Kotick, the former CEO of Activision, received a $400 million golden parachute at the end of the year for selling off the company.
