A history of alleged widespread harassment at Activision Blizzard could be a headache for Microsoft and its $68.7 billion deal

The word “culture” is often casually thrown about in corporate M&A announcements. Numbers and payouts often are de-emphasized (at least publicly) in favor of statements on how businesses were entirely aligned in vision and “a good cultural fit.” 

But there is enormous weight behind that single word. It points to people and their personalities, what they believe, and how they interact with one another; who is in charge and how they manage their reports; the way in which a whistleblower’s concerns are handled or ignored; or how women and people of color are treated when sitting at the table. It’s exactly that—the merging of two cultures—that can become one of the most significant roadblocks to a successful merger. And it may be this, not the Federal Trade Commission’s antitrust investigation, that could become Microsoft’s greatest challenge in its $68.7 billion acquisition of Activision Blizzard, the gaming company behind World of Warcraft and Overwatch.

A Fortune investigation, published this morning, details years of harassment where women say they were routinely belittled and discriminated against going back to the company’s early days. More than two dozen current or former Blizzard employees spoke with Fortune contributor Courtney Rubin for the story, describing a “hotness” spreadsheet that ranked new female hires and stated whether they were available or not, memories of being groped at company events, and being instructed to drink alcohol (“until I was blackout drunk,” according to one woman). Women reported rape and sex trafficking jokes.

Many of these concerns were raised in a California Department of Fair Employment and Housing (DFEH) lawsuit in July 2021 that alleged that Activision Blizzard had paid women less, were in lower-level positions, were less likely to be promoted, and were subject to “constant sexual harassment,” among other grievances. (Activision denied “all allegations of wrongdoing,” and said it had agreed to the settlement with DFEH to avoid “the expense, distraction and possible litigation associated with such a dispute”.)

A major problem appears to be that these allegations weren’t properly addressed when brought to the attention of HR or management. Here’s an excerpt from Fortune’s story:

“Employees recount a revolving door of HR hires that made it hard to build up trust. And if HR did take action on complaints, according to some employees, it was often just to move the problem person to another team. There was rarely, if ever, a paper trail. If HR came back and said, as they did with one woman, ‘It’s a misunderstanding. We’ll talk to him,’ there was no proof that they did. [A former software engineer] says that after she posted about her experiences at Blizzard on Twitter, including negative encounters with HR, she heard similar stories from more than 300 employees and alums. Multiple women told Fortune that they didn’t feel they could trust the HR process and that speaking out might in fact be used against them.”

Microsoft gaming chief Phil Spencer has said that Activision Blizzard is making progress and told the Wall Street Journal that “we see the progress that they’re making that was pretty fundamental to us deciding to go forward here.” (Microsoft said last month it was reviewing its own sexual harassment and gender discrimination policies). Activision Blizzard did commit at the end of last year to launching a zero-tolerance harassment policy, upping the number of women and nonbinary people it employs, waiving required arbitration of sexual harassment and discrimination claims, and providing more regular updates to its progress.

Activision Blizzard told Fortune that “the Blizzard you portray from years past is not the Blizzard of today. Virtually no one you mention from Blizzard is still with the company, and the events and processes you highlight are not a reflection of today’s Blizzard—nor have they been for years. The leadership team at Blizzard is focused on creating the best possible environment for every member of our team. Across Activision Blizzard, our goal is to set an example for our industry with a truly safe and respectful workplace. Mr. Kotick is focused on ensuring that we live up to our values and aspirations without exception, and we are working hard to take the actions necessary to do so.”

Whether Activision’s culture has, indeed, changed—and what it looks like now—could play a major role in the success of Microsoft’s largest acquisition to-date. If the FTC gives the deal a green light, I suppose we’ll quickly start to find out.

Please note: Yesterday, I referred to Silver Lake as Silver Lake Capital. Please forgive my error.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com


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