Concerns Over EA’s Potential Acquisition and Industry Impacts

In the coming weeks, federal regulators are expected to decide on a significant acquisition. Saudi Arabia’s Public Investment Fund, Silver Lake, and Affinity Partners are proposing a $55 billion purchase of Electronic Arts (EA). Ahead of this decision, EA announced layoffs impacting customer support, trust and safety, recruitment, and IT workers.

Regulators in the European Union are set to finalize their terms for the deal this week. U.S. regulators are likely nearing a decision as well. This scenario mirrors a trend in the gaming industry. Numerous game developers, artists, engineers, quality assurance workers, and support staff have lost their jobs due to company consolidations and reorganizations.

The latest job cuts at EA affect those who assist players with issues, moderate online communities, and maintain trust and safety systems. Although these roles may not make headlines, players notice their absence immediately.

As a Players Alliance member, I’ve conversed with gamers increasingly frustrated with the industry’s direction. Concerns include layoffs, rising prices, subscriptions, and microtransactions. A common thread among these concerns is the growing disconnect between decision-makers and the gaming community.

Nearly 100,000 gamers nationwide oppose the proposed EA acquisition.

Sens. Elizabeth Warren and Richard Blumenthal have urged greater scrutiny of the transaction. They express concerns about foreign influence and the Saudi Public Investment Fund’s role. Over 40 House Democrats have asked federal regulators to examine the deal’s effects on workers, competition, and labor markets.

The overarching debate centers on incentives. Proponents suggest new ownership can bring resources, stability, and long-term investment. Yet, regulators should also evaluate past leveraged acquisitions across industries. Expecting returns on tens of billions in acquisition costs often leads to layoffs, restructuring, and price hikes. Organizations may prioritize short-term financial targets over user experience and product investment.

The gaming industry increasingly relies on subscriptions, premium upgrades, microtransactions, and recurring revenue models. This approach fuels perceptions that companies prioritize revenue over serving customers.

The Federal Trade Commission’s focus on the impacts of consolidation on workers and labor markets is crucial. In gaming, these effects often hit employees and creative teams before appearing in financial reports.

The Committee on Foreign Investment in the United States requires equal consideration. Congress established the committee to scrutinize transactions involving foreign government entities seeking influence over major U.S. companies.

Though EA isn’t a defense contractor, its influence in entertainment is vast. EA’s games and online communities reach over 100 million people monthly. A thorough review by regulators is essential, regardless of whether they agree with expressed concerns.

Beyond this acquisition, the broader issues include consolidation, labor conditions, consumer welfare, and financial institutions’ growing influence.

While regulators may not base decisions on gamers’ wishes, they should consider whether this acquisition would exacerbate industry problems. Current layoffs and consolidations suggest skepticism. If evidence aligns with the concerns of gamers, workers, and lawmakers, rejection of the deal could be prudent.

Otis East is a Players Alliance member.