Activision Sexual Misconduct Fallout Prompted Microsoft to Pursue Deal

Late last year, as employees at Activision Blizzard Inc. and Chief Executive Officer Bobby Kotick were reeling from accusations that Kotick knew of sexual harassment at the company for years, a group of Microsoft Corp. senior executives suggested that Xbox head Phil Spencer check in with the embattled CEO.

The goal, according to a person familiar with the matter, was to offer support to a key partner and make it clear that Microsoft had concerns about the treatment of women at Activision. Another aim: to ensure that if Kotick and the board were willing to sell the company, Microsoft would be well positioned to make an offer. After a few phone calls over a two-week period, discussions evolved. Microsoft grew interested in a takeover.

That led to Tuesday’s announcement that Microsoft had struck a $68.7 billion deal to acquire Activision, adding a legendary game publisher responsible for franchises like Call of Duty and World of Warcraft. It’s a combination that catapults Microsoft to the top ranks of game makers, gives the company the mobile audience that has eluded it for years, and adds strength as the software giant and rivals race to build out the virtual-reality platform known as the metaverse.

Though the events that paved the way for the eventual agreement kicked off in mid-November, Microsoft senior executives had been dropping hints for months that they were looking for deals. CEO Satya Nadella had been searching since at least the summer of 2020 for an acquisition that would deliver the software maker a stable of consumer users. In November 2021, at an interview at the Paley International Council Summit, Spencer reiterated his frequently stated position that he was on the hunt for acquisitions, noting Xbox in particular wanted deals that added casual and social games — something provided by Activision’s mobile titles. “We have a lot of ambition,” Spencer said at the summit.