Bobby Kotick

New York City officials have sued Activision Blizzard over its agreement to be sold to Microsoft.

The suit, filed by New York City Employees’ Retirement System, argues that Activision CEO Bobby Kotick rushed to secure Microsoft’s takeover bid in an effort to cover up controversies at his company.

Specifically, a California lawsuit from July 2022 alleged that Activision Blizzard fostered a “frat boy culture” in which employees, particularly women, faced harassment and other forms of abuse. More controversy surfaced in November when The Wall Street Journal reported that Kotick not only knew about these incidents, but worked to cover them up, including by threatening to kill an assistant. Microsoft ultimately announced its intent to acquire Activision Blizzard two months later.

“Given Kotick’s personal responsibility and liability for Activision’s broken workplace, it should have been clear to the Board that he was unfit to negotiate a sale of the Company,” the suit says. “But it wasn’t.”

The New York plaintiffs, who own stock in Activision Blizzard, added that the deal provides “Kotick and his fellow directors [with] a means to escape liability for their egregious breaches of fiduciary duty.” Microsoft’s $95/share deal, they claim, undervalues Activision Blizzard, which was trading at close to that price prior to the California lawsuit.

As part of their suit, the New York plaintiffs are demanding access to various Activision Blizzard documents, including those pertaining to the takeover and the five other potential buyers that the company had mentioned in previous filings.

For now, though, the Microsoft takeover must go through regulatory approval in multiple countries, including the U.S. and China. Activision Blizzard shareholders have voted to approve the deal, but Wall Street remains skeptical it will go through.

It’s also unclear what will happen with Kotick himself. While he’s been expected to leave once Microsoft’s acquisition of Activision Blizzard is finalized, a recent report indicates that Microsoft hasn’t actually discussed his future. If the deal is approved, Kotick could make as much as $530 million USD (about $676.7 million CAD).

The full New York suit can be found here.

Image credit: Wikimedia Commons

Via: Axios

Bobby Kotick, the scandal-ridden CEO of gaming giant Activision Blizzard, may finally step down, reports The Wall Street Journal (WSJ).

Citing multiple company sources, the WSJ says Kotick is currently only expected to remain as CEO until Microsoft’s $68.7 billion USD (about $86 billion CAD) acquisition of Activision Blizzard has closed. Microsoft expects this to be completed “in fiscal year 2023,” which means Kotick will likely remain as CEO for up to 18 months. It’s unclear whether other leaders are expected to depart as well.

Kotick has faced numerous calls to resign following a July 2021 California lawsuit alleging a years-long “frat boy culture” that led to sexual harassment, abuse and unfair hiring practices towards women. Then, in November, a WSJ report alleged that Kotick was not only aware of these issues, but actively worked on keeping them out of the public eye.

Kotick, meanwhile, has said he’ll only do so if the company’s issues aren’t fixed “with speed.” In a new interview with The New York Times regarding Microsoft’s acquisition of the company, Kotick also wouldn’t confirm whether he’ll step down after the deal closes, simply saying he’ll be “available as needed.”

Of course, the deal needs to actually be approved by all of the requisite U.S. regulators and lawmakers. While it’s possible it could be blocked, Microsoft (post-Activision Blizzard acquisition) would still only account for less than 15 percent of total gaming revenue behind Sony and Tencent. Therefore, analysts expect that it will likely go through.

As Xbox boss Phil Spencer noted in a press release, Activision Blizzard will “continue to operate independently” from Microsoft until the deal is complete. Once that’s happened, Activision Blizzard will report to him directly.

It’s worth noting that Spencer had previously said he was “deeply disturbed” by the allegations surrounding Activision and that Xbox was reevaluating its relationship with the company accordingly. Following the news of the acquisition plans, some gamers have pointed out that acquiring the company full-stop is an odd way of doing that.

Bloomberg‘s Jason Schreier also noted on Twitter that he’s heard from some Activision Blizzard employees who simultaneously feel optimistic about change amid Xbox Game Studios’ “positive culture,” and “fury toward Microsoft for giving Bobby Kotick a big payday and soft exit.” Further, criticism was levied at Microsoft CEO Satya Nadella, who said he’s “grateful to [Kotick’s] leadership and commitment to real culture change.”

However, given the legalities surrounding a major acquisition like this, it’s unlikely that Microsoft could comment further on the issues. As VentureBeat‘s Jeff Grubb pointed out on Twitter, Spencer or other Microsoft executives providing any elaboration could have been seen as “price manipulation” that would have impacted the deal.

In a statement posted to Twitter, the ABK Workers Alliance, a group made up of employees of Activision, Blizzard and King, said the acquisition news is “surprising” but “does not change [its] goals” with regards to improving Activision Blizzard.

“The news of Activision’s acquisition by Microsoft is surprising, but does not change the goals of the ABK Worker’s Alliance. We remain committed to fighting for workplace improvements and the rights of our employees regardless of who is financially in control of the company. We will continue to work alongside our allies across the gaming industry to push for measurable change in an industry that desperately needs it. We called for the removal of Bobby Kotick as CEO in November for shielding abusers and he still remains CEO as of this writing. The strike for Raven QA is in its fifth week, and our striking staff has still not received response from leadership regarding our request to negotiate. And finally, 3 out of 4 of our original collective demands to improve the conditions of women in our workforce have not been met. Whatever the leadership structure of the company, we will continue our push to #EndAbuseInGaming, and appreciate the outpouring of support we’ve experienced in the last year.

The Raven strike, in particular, is referring to dozens of developers at the studio behind Call of Duty: Warzone protesting the sudden termination of 12 quality assurance (QA) contractors. QA plays a significant role in ensuring that a game runs sufficiently, and Warzone has been plagued with bugs amid these layoffs. Multiple QA workers told The Washington Post that they attribute these issues to Raven’s now-reduced QA team. Others said to Inverse that Activision Blizzard has yet to address their concerns.

Source: Wikipedia