The FTC isn’t too happy with Microsoft’s Activision Blizzard layoffs
And it’s still looking to reverse the already-completed deal
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And it’s still looking to reverse the already-completed deal
One week after Microsoft laid off nearly 2,000 employees in its gaming division, the Federal Trade Commission is accusing Microsoft of contradicting its pledge to allow Activision Blizzard to operate independently post-acquisition. The FTC filed a complaint in a federal appeals court on Wednesday, arguing that last week’s downsizing, which affected employees of Activision Blizzard, “contradicts Microsoft’s representations in this proceeding.” The FTC is asking for a temporary pause of Microsoft’s acquisition of Activision Blizzard as it further investigates potential antitrust issues.
In its arguments to the FTC over the past two years, Microsoft said it would treat Activision Blizzard as a vertical acquisition and suggested that it wouldn’t need to institute layoffs, since there would be no redundancies. On January 30, Microsoft announced it was cutting 1,900 jobs across Activision Blizzard, ZeniMax and Xbox after identifying “areas of overlap” specifically between Microsoft and Activision Blizzard. This discrepancy is the core of the FTC’s complaint.
“Microsoft’s recently-reported plan to eliminate 1,900 jobs in its video game division, including in its newly-acquired Activision unit, contradicts the foregoing representations it made to this Court,” the FTC’s complaint said. “Specifically, Microsoft reportedly has stated that the layoffs were part of an ‘execution plan’ that would reduce ‘areas of overlap’ between Microsoft and Activision, which is inconsistent with Microsoft’s suggestion to this Court that the two companies will operate independently post-merger.”
Though the UK’s Competition and Markets Authority approved Microsoft’s $69 billion acquisition of Activision Blizzard in October, the FTC hasn’t seen satisfaction regarding its own antitrust concerns. The FTC is still challenging the acquisition, which means there’s a possibility that Microsoft will be forced to divest all or part of Activision Blizzard.
In Wednesday’s complaint, the FTC argued that the recent layoffs also undermine its own ability to order relief for employees who were negatively affected in the acquisition.
Microsoft’s layoffs join an avalanche of mass firings in the video game industry, specifically in the past few months. An estimated 10,500 people in video games lost their jobs in 2023 — and already in 2024, 6,000 workers have been laid off.
This article originally appeared on Engadget at https://www.engadget.com/ftc-accuses-microsoft-of-misrepresenting-its-activision-blizzard-plans-after-layoffs-215502314.html?src=rss
Everyone has an opinion on the blockbuster merger of Microsoft and Activision Blizzard, but not everyone has served as a top lawyer for the Federal Trade Commission. In a recent article, former General Counsel of the FTC Alden Abbott opined that the UK’s Competition and Markets Authority should not have blocked the deal from proceeding, saying that the body did not fully consider the facts.
In the piece, Abbott argues that the CMA overstated the impact of cloud gaming in the short-term, pointing out that the promising technology has yet to make significant inroads with consumers yet. “Although cloud gaming does not require the purchase of specific gaming devices, it does require substantial bandwidth, stable internet connections, and subscriptions to particular services,” he writes.
He also agrees with a common argument advanced by advocates of the deal, which is that Microsoft is unlikely to remove Call Of Duty from PlayStation as a platform because it simply makes so much money, and the company faces competition from many other players in the space besides Sony. He concludes by stating that the decision may threaten similar “efficiencies-generating” acquisitions in the future. It’s worth noting that though the CMA’s initial decision has been made, the case is still ongoing, with Microsoft and Activision appealing the decision.
The warning came in a blog post titled “The Luring Test: AI and the engineering of consumer trust.”
In the 2014 movie Ex Machina, a robot manipulates someone into freeing it from its confines, resulting in the person being confined instead. The robot was designed to manipulate that person’s emotions, and, oops, that’s what it did. While the scenario is pure speculative fiction, companies are always looking for new ways — such as the use of generative AI tools — to better persuade people and change their behavior. When that conduct is commercial in nature, we’re in FTC territory, a canny valley where businesses should know to avoid practices that harm consumers…
As for the new wave of generative AI tools, firms are starting to use them in ways that can influence people’s beliefs, emotions, and behavior. Such uses are expanding rapidly and include chatbots designed to provide information, advice, support, and companionship. Many of these chatbots are effectively built to persuade and are designed to answer queries in confident language even when those answers are fictional. A tendency to trust the output of these tools also comes in part from “automation bias,” whereby people may be unduly trusting of answers from machines which may seem neutral or impartial. It also comes from the effect of anthropomorphism, which may lead people to trust chatbots more when designed, say, to use personal pronouns and emojis. People could easily be led to think that they’re conversing with something that understands them and is on their side.
Many commercial actors are interested in these generative AI tools and their built-in advantage of tapping into unearned human trust. Concern about their malicious use goes well beyond FTC jurisdiction. But a key FTC concern is firms using them in ways that, deliberately or not, steer people unfairly or deceptively into harmful decisions in areas such as finances, health, education, housing, and employment. Companies thinking about novel uses of generative AI, such as customizing ads to specific people or groups, should know that design elements that trick people into making harmful choices are a common element in FTC cases, such as recent actions relating to financial offers , in-game purchases , and attempts to cancel services . Manipulation can be a deceptive or unfair practice when it causes people to take actions contrary to their intended goals. Under the FTC Act, practices can be unlawful even if not all customers are harmed and even if those harmed don’t comprise a class of people protected by anti-discrimination laws.
The FTC attorney also warns against paid placement within the output of a generative AI chatbot. (“Any generative AI output should distinguish clearly between what is organic and what is paid.”) And in addition, “People should know if an AI product’s response is steering them to a particular website, service provider, or product because of a commercial relationship. And, certainly, people should know if they’re communicating with a real person or a machine…”
“Given these many concerns about the use of new AI tools, it’s perhaps not the best time for firms building or deploying them to remove or fire personnel devoted to ethics and responsibility for AI and engineering. If the FTC comes calling and you want to convince us that you adequately assessed risks and mitigated harms, these reductions might not be a good look. ”
Thanks to Slashdot reader gluskabe for sharing the post.
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As a result, the FTC is proposing to strengthen the terms of the 2020 agreement to put additional restrictions on the company, which would apply to all of Meta’s services including Facebook, Instagram, WhatsApp and Oculus. The proposed terms include a blanket ban on monetizing data from users under 18. That means any data collected from these users could only be used for security reasons and any data collected while users are under age could not be later monetized once they turn 18. The FTC also seeks to impose a pause on the company’s ability to launch new or modified products or services until the independent assessor confirms in writing that Meta’s privacy program is in full compliance with the terms of the agreement. Compliance with the 2020 order would also extend to any companies Meta acquires or merges with. The proposal would also require Meta to get affirmative consent from users for future use of facial recognition technology.
Facebook spokesperson Andy Stone called the FTC’s move a “political stunt.” He said in a statement: “Despite three years of continual engagement with the FTC around our agreement, they provided no opportunity to discuss this new, totally unprecedented theory. We have spent vast resources building and implementing an industry-leading privacy program under the terms of our FTC agreement. We will vigorously fight this action and expect to prevail.”
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