On January 18th, 2022, Microsoft announced that they intend to buy Activision Blizzard, the makers of Call of Duty, Overwatch, and Diablo, for $68.7 billion. This means that Microsoft will be the third largest gaming company by revenue behind Sony and Tencent. This will allow Microsoft to increase their first-party games and increase the games available to Game Pass subscribers.

However, this deal also comes amidst major controversy surrounding the treatment of employees at Activision Blizzard King and calls for CEO Bobby Kotick to resign from the company. This means that people will be watching how Microsoft handle these issues very closely. Another issue is that regulators will be heavily scrutinising the deal as this is the biggest deal in gaming history.

Controversy at Activision Blizzard

On July 22nd, 2021, Activision Blizzard was sued by California for creating and cultivating a culture of “constant sexual harassment” and gender-based discrimination. The lawsuit also claims that top executives were aware, and some were possibly involved.

Due to the disturbing claims levied in this lawsuit we are starting with a Trigger Warning as the idea that male employees held “cube crawls” is a tame accusation in comparison to what is alleged in this lawsuit. Please be warned that some details below are disturbing to say the least.

In the office, women are subjected to “cube crawls” in which male employees drink copious amounts of alcohol as they “crawl” their way through various cubicles in the office and often engage in inappropriate behaviour toward female employees. Male employees proudly come into work hungover, play video games for long periods of time during work while delegating their responsibilities to female employees, engage in banter about their sexual encounters, talk openly about female bodies, and joke about rape.

These are just some of the many allegations that have been levied against Activision Blizzard and the alleged sexual harassment is on top of allegations of discrimination against female employees who were refused promotions, subject to pay discrimination and outright retaliation. In the months since many female employees have stepped forward to corroborate these allegations and 20 employees have been reprimanded as part of harassment investigations according to Activision Blizzard representatives.

Regulatory Scrutiny

The Activision Blizzard deal was only announced about two weeks ago so we haven’t seen how regulatory agencies will react to this acquisition yet, but we can assume that this deal will be heavily scrutinised as Microsoft is one of the biggest technology companies in the world and this deal will make them the third largest gaming company by revenue.

This acquisition also shows that the gaming space is becoming increasingly consolidated as recent acquisitions by Sony and Microsoft show that companies are very worried about the possibility of being forced out by a lack of content due to competitors buying out other companies. With Microsoft gaining a large amount of IP through this deal they may also be forced to make certain concessions such as agreeing to keep certain content like Call of Duty multiplatform for several years after the deal closes.

Future exclusivity

As alluded to in the paragraph above, this deal also brings into question whether Activision blizzard content will become exclusive to PC and Xbox in the future. Whilst Microsoft may want to use their new IP and keep it just to their own platforms, they will also have to adhere to all pre-existing agreements that have been made between Activision and Sony be that exclusivity for upcoming games or console exclusive content.

Microsoft have also shown that they are open to keeping franchises on competing platforms as seen by their purchase of Mojang back in 2014 as they have kept Minecraft on multiple platforms ever since and show no signs of taking content away from other platforms in the future. However, the same can’t be said about Microsoft’s purchase of Bethesda as they have announced that starfield, Bethesda’s highly anticipated space RPG, will be exclusive to Xbox Series consoles and PC. This brings into question whether future Activision titles could be moved to be on Microsoft platforms only in the future, but we will have to wait and see what happens in the future before we know more.