FTC Scrutinizing Labor Impact of Microsoft-Activision Merger

The Federal Trade Commission is investigating Microsoft Corp.’s proposed purchase of Activision Blizzard Inc. and how it might impact workers, chair Lina Khan told lawmakers.

In a June 9 letter to Sen. Elizabeth Warren, a Democrat from Massachusetts, Khan confirmed the agency is looking into the proposed deal, noting that the companies previously disclosed the FTC’s merger review.

“I strongly believe that merger investigations must scrutinize the impact on labor markets,” Khan said. “Whenever the FTC initiates a merger review, we are committed to thoroughly examining effects on competition in all relevant markets for potential law enforcement action.”

Khan’s letter was a response to a March 31 missive from Warren and other senators urging the FTC to closely examine how the proposed deal would impact workers at Activision, who have called for greater accountability at the company in the wake of sexual harassment and discrimination allegations.

In her letter, Khan said the FTC is also focusing on whether certain types of contracts, such as non-compete clauses that bar workers from switching jobs within an industry or non-disclosure agreements, violate antitrust or consumer protection laws.

Last month, a majority of video game testers at Activision’s Raven Software unit voted to form a union, a first for a U.S.-listed game company. The company said it would begin negotiations with the Communications Workers of America to reach a collective bargaining agreement.

Activision has been shrouded in controversy since last year after a state agency filed a sexual harassment lawsuit against the Santa Monica, California-based company, describing its “frat boy culture” and accusing its leadership of failing to take action. The U.S. Securities and Exchange Commission later launched an investigation into how the company handled the reports of misconduct.

On Monday, Microsoft announced a labor neutrality agreement with CWA, agreeing that the company will take a neutral approach if employees express interest in joining a union. The agreement will apply to Activision-Blizzard after the acquisition closes.

The tech giant also said last week it would stop using noncompetes or confidentiality clauses to bar workers from talking about discrimination or harassment as part of a settlement or separation deal.

The two moves are widely viewed as efforts by Microsoft to assuage potential regulatory concerns about its Activision buy.

Leah Nylen reports for Bloomberg News.

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