Just at the end of last year, EA (Electronic Arts) shareholders...Nod in agreementFollowing the $550 billion acquisition, opposition from Washington is growing. The Congressional Labor Caucus, composed of 46 Democratic members of the House of Representatives, convened this week...Write toThe U.S. Federal Trade Commission (FTC) has strongly urged a “thorough review” of the acquisition consortium led by the Saudi Arabian Public Investment Fund (PIF), warning that the deal could have a devastating impact on U.S. gaming industry workers.
Leveraged buyouts could trigger a wave of layoffs; who will shoulder the $200 billion debt?
According to the transaction structure, of the $550 billion EA deal, approximately $200 billion was raised through leveraged buyouts (LBOs).
In their letter, lawmakers pointed out that such high leverage would force EA to bear enormous debt burdens after privatization. Historically, to repay these debts, new owners often resort to aggressive cost-cutting measures, including large-scale layoffs, studio closures, outsourcing, or restructuring.
Given that EA has already laid off more than 1700 employees since 2023, the union is worried that this privatization deal is just the beginning of a bigger nightmare.
Saudi Arabia-led + cross-sector monopoly
In addition to labor issues, the letter also raised complex concerns about "cross-industry monopolies." The buyer consortium includes the Saudi Public Investment Fund, which is expected to hold up to 93.4% of the shares, as well as private equity firm Silver Lake and Affinity Partners, an investment firm founded by Trump's son-in-law, Jared Kushner.
Lawmakers warned that the consortium's reach extends into the sports and entertainment industries:
• Silver Lake:Investing in WME (a talent agency) and TKO (the parent company of UFC and WWE).
• Saudi Arabia's Public Investment Fund:It owns the LIV Golf professional golf tour.
• EA:They monopolized the sports game market, including titles like Madden NFL and EA Sports FC.
This complex web of cross-shareholdings can lead to anti-competitive behaviors of "self-preferencing," such as EA monopolizing certain sports event licenses or using its dominant position in the labor market to suppress developers' salaries and bargaining power.
CWA union strongly supports and calls for the protection of creative freedom.
This review request also received support from the Communications Workers Association (CWA). As early as last October, the CWA wrote to the Federal Trade Commission and the Committee on Foreign Investment in the United States (CFIUS), warning that the transaction involved handing over sensitive data of millions of American users to a foreign government (Saudi Arabia), posing a national security risk.
The deal is currently expected to close in the first quarter of 2027, but this is contingent on obtaining approval from regulatory bodies in various countries.
