With Activision Deal, Microsoft Gets Another Scandal to Clean Up
(Bloomberg) -- Last week, Microsoft Corp. said it’s taking steps to manage a lingering sexual misconduct scandal surrounding the company and its co-founder, Bill Gates. This week, it agreed to buy a video game publisher besieged by its own sexual harassment and discrimination crisis.
The purchase of Activision Blizzard Inc. for $68.7 billion will give Microsoft some of the biggest video games in consoles and smartphones and a beachhead in a possible next phase of computing, the metaverse. But first, Microsoft will need to deal with allegations that Activision underpaid women and allowed sexism and harassment to go unpunished. Failing to do so could make Microsoft a less hospitable environment for women and people from underrepresented groups and a less attractive place to work.
“Activision has clearly mishandled allegations of sexual harassment and appears to have cultivated a male-dominated culture and a record of protecting predators,” said Natasha Lamb, a managing partner at Arjuna Capital who was instrumental in securing Microsoft’s agreement last week to hire an outside law firm to investigate the culture and allegations that Gates acted inappropriately toward some female employees. “Microsoft is obviously not immune to these issues and will have a lot of cleaning up to do.”
Microsoft shareholders, over the company’s opposition, approved a nonbinding resolution in November for a review of sexual harassment policies. The law firm will examine concerns raised by employees in a lengthy 2019 email thread and actions Microsoft took to address them. The firm will compare the company’s handling of misconduct allegations and its rulebook with those of peers.
Lamb plans to seek assurances from Microsoft that Activision will get the same treatment once the deal is finalized. “At least Microsoft is moving forward toward cleaning up their own house, and maybe they can bring that to Activision,” she said.
Activision has been embattled since July, when a California state agency filed a sexual bias lawsuit against the Santa Monica, California-based company. The complaint described in lurid detail its “frat boy culture” and accused leadership of failing to take action. U.S. regulators later launched a probe. Bobby Kotick, who has led Activision for three decades, came under pressure to resign after an explosive report in the Wall Street Journal last fall tied him personally to reports of mistreatment of women and suggested that he was aware for years of sexual misconduct, including rape, at the company but didn’t report it to the board. Kotick apologized and pledged to make changes.
Microsoft has distanced itself from the men at the center of each controversy. Gates had previously cut ties with management, and Kotick will lose his chief executive officer title after the deal is complete in 2023 and will probably leave, a person familiar with the matter said.
As part of the acquisition talks, Microsoft evaluated Activision’s plans to address harassment issues, said Phil Spencer, the head of Microsoft gaming. “We’re on our own journey here,” he said in an interview. “How can we share our learning with other teams and help the industry continue on this journey that we all need to be on?”
Still, the deal will likely be dispiriting to some women at Microsoft, Activision and throughout the technology industry, said Elizabeth Tippett, an associate professor at the University of Oregon School of Law who has studied technology and harassment training. In a way, Microsoft benefited from the Activision scandal, which took a steep toll on the share price and made an acquisition more affordable, she said. “What message does this send to women who are working at Microsoft: We don’t care about buying a tainted company — we’re going to buy it because it’s on sale?” Tippett said
Male dominance permeates both companies’ products, said Jenna Drenten, who studies digital culture and consumer behavior as an associate professor of marketing at Loyola University Chicago. Microsoft’s Halo, Elder Scrolls and Fallout series and Activision’s Call of Duty, Overwatch and World of Warcraft largely revolve around strong male heroes and scantily clad women, she said. “Both of these sets of games have a deeply embedded history of harassment and gender-based sexualization in the actual game play,” Drenten said.
The result is that women and people of color are increasingly gravitating to smaller studios that reflect their values, said Mia Consalvo, a professor and Canada research chair in game studies and design at Concordia University in Montreal. Activision has said it ousted more than 20 employees as a result of its investigations, but a lot more will need to be done to convince people from underrepresented groups that it’s a safe workplace, Consalvo said.
“Nothing really changes,” she said. “A few people come and go, but the culture remains the same.”
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