Microsoft announced plans to purchase Activision Blizzard for nearly $70 billion, making it the largest acquisition in Microsoft's history, even as the video gaming publisher faces multiple lawsuits.
"The culture of our organization is my number one priority," Microsoft CEO Satya Nadella said in a conference call yesterday. "It's critical for Activision Blizzard to drive forward on its" commitments to improve its workplace culture.
Activision Blizzard, the company behind games including Call of Duty and Candy Crush, is currently being investigated by the Securities and Exchange Commission. Last July, the state of California sued the company stating, "Defendants have also fostered a pervasive 'frat boy' workplace culture that continues to thrive," while "breeding a ground for harassment and discrimination against women."
The suit also alleged women were assigned lower-paid and lower opportunity levels across the company while promoted more slowly and fired faster than their male counterparts.
In response to the misconduct allegation, Activision's Board of Directors released a statement saying the company "remains committed to the goal of making Activision Blizzard the most welcoming and inclusive company in the industry."
Despite misconduct claims and a petition calling for resignation, Activision CEO Bobby Kotick will keep his position, reporting to Microsoft Gaming CEO, Phil Spencer.
"We deeply value individual studio cultures. We also believe that creative success and autonomy go hand-in-hand with treating every person with dignity and respect," Spencer said in a statement. "We hold all teams, and all leaders, to this commitment.
The all-cash $68.7 billion deal will make Microsoft the third-largest video game company behind Sony and Tencent.
After the announcement, Activision Blizzard Inc.'s shares increased 27 percent, while Microsoft's shares fell less than 1 percent.
In a news release, Microsoft shared its plans to add Activision Blizzard games into Game Pass, with over 25 million subscribers.
"Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms," Nadella said in a statement.
However, this deal will face scrutiny from both U.S. and European regulators over the upcoming months. Spencer added that until the deal closes, the two companies will continue to operate independently.
"No way should the Federal Trade Commission and the U.S. Department of Justice permit this merger to proceed," said Alex Harman, Public Citizen competition policy advocate, in a statement.
Last year, Microsoft acquired ZeniMax Media, the company behind The Elder Scrolls, for $7.5 billion. If this deal closes, which Microsoft expects in 2023, this will be one of the largest tech acquisitions in history.
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