Can Microsoft acquisition cure Activision’s toxic workplace?

Microsoft, which is reviewing its own sexual-harassment policies, could be taking on an even tougher challenge


Microsoft’s proposed acquisition of Activision Blizzard is raising further concerns about the videogame company’s workplace culture. Last July, Activision employees walked out to denounce the company’s response to a California lawsuit over sexual harassment and discrimination charges. AFP VIA GETTY IMAGES

Jan. 22, 2022 By Levi Sumagaysay

Besides concerns about antitrust scrutiny and a record $68.7 billion price tag, Microsoft Corp.’s planned acquisition of Activision Blizzard Inc. also raises a key question: How will it deal with the videogame company’s notorious workplace culture?

While the videogame industry has long suffered from a culture that “denigrates women,” according to Ann Olivarius, a lawyer who has specialized in women’s rights, she sees Activision ATVI, -0.50% as one of the worst examples of toxic workplaces.

Olivarius said the gaming industry allows for “a culture of violence,” mentioning Gamergate, in which female gamers, developers and journalists were targeted for online and offline harassment, including rape and death threats in 2014. She said that culture will be hard to change, as the industry attracts people who want to play games that contain violence. And though Microsoft MSFT, -1.85% makes the Xbox console and has been steeped in videogames for decades, Olivarius said “they don’t have the culture of violence that Activision has.”

In the past few years, Activision has been targeted for investigation by the Securities Exchange Commission and the Equal Employment Opportunity Commission, and is facing a lawsuit from the California Department of Fair Employment and Housing that alleges gender discrimination against and “constant” sexual harassment of women, retaliation against women for complaining, and includes a mention of a female employee’s suicide during a business trip with her male supervisor. Since the California lawsuit filed in July, dozens of employees have left or been disciplined, the company has confirmed.

The investigations have also uncovered documents that show Activision Chief Executive Bobby Kotick knew about years of allegations of sexual misconduct but did not disclose everything to the company’s board. And the Wall Street Journal reported that Kotick himself has been accused of and settled allegations of sexual harassment.

See: Microsoft commits to biggest tech acquisition ever with $69 billion deal for Activision Blizzard

If the acquisition clears antitrust hurdles and is approved, experts see either a big plus for Activision — publisher of games such as “Call of Duty” — in the form of cleaning up its culture, or a bust for Microsoft if that cleanup fails. Kotick acknowledged in an interview with VentureBeat that the drag on Activision’s stock from the fallout over the sexual harassment scandals was a factor in his company’s decision to agree to a sale to Microsoft.

Kathryn Rudie Harrigan, a professor at Columbia Business School who teaches strategic management courses, said the deal could be good for Activision and could, along with the investigations and other actions, be a step toward improving conditions for its female employees.

“It’s all going to come out into the limelight,” she said. “How backward-thinking Activision Blizzard has been.”

Microsoft itself has dealt with similar accusations, though it appears not to be to the same degree. Still, it announced last week that it has hired a law firm to review sexual-harassment and gender-discrimination policies after accusations of sexual harassment and gender discrimination in 2019, including against co-founder Bill Gates. Its review of its own policies was sparked by a shareholder resolution submitted by Arjuna Capital that was supported by 78% of voting Microsoft investors.

Natasha Lamb, managing partner at Arjuna Capital, said Microsoft agreeing to review its policies puts the software giant in a better position to turn around and say it wants to buy Santa Monica, Calif.-based Activision.

“Absent that commitment, they’d be in hot water from their shareholders,” Lamb said, noting that she could understand the financial case for Microsoft buying Activision. But “from a cultural standpoint, it doesn’t seem like a good match.”

Some Microsoft employees agree. They expressed their concerns about introducing an “awful” and “dangerous” culture on an internal message board this week, according to Business Insider.

See: Activision CEO stands to reap nearly $400 million in Microsoft deal, and that may be just the start

When reached for comment Thursday, an Activision spokesman referred MarketWatch to Kotick’s letter to employees this week. Kotick said the company is doing work “to set a new standard for a welcoming and inclusive workplace culture,” and that Microsoft will support that “journey.” The company spokesman also pointed to announcements Activision has made in the past several months, including instituting a “zero-tolerance” harassment policy.

Microsoft has not returned a request for comment.