The high prices of vintage video games at auction 1:03
New York (CNN Business) --
Microsoft announced plans Tuesday to acquire Activision Blizzard in a massive deal worth nearly $70 billion.
It's one of the biggest acquisitions in the tech industry in recent years, one that will boost Microsoft's position in the growing games industry, but it could be complicated by recent concerns about Activision's toxic culture.
The all-cash transaction is valued at $68.7 billion and Microsoft says it will make the company the third-biggest game company by revenue, after Tencent and Sony.
Activision, a controversial company
Bobby Kotick, the controversial CEO of Activision Blizzard, will continue in his role, according to a press release detailing the announced acquisition.
Activision employees had previously staged walkouts and called on Kotick to resign for allegedly having been aware of widespread harassment and discrimination issues at the company for years.
The California Department of Fair Employment and Housing filed a lawsuit against Activision Blizzard in August 2021 alleging a "brotherhood" workplace culture that subjected female employees to discrimination, sexual harassment, and unequal pay.
It further alleges that "company executives and human resources personnel were aware of the harassment and failed to take reasonable steps to prevent the illegal conduct and instead retaliated against the women who complained."
J. Allen Brack, then-chairman of Activision, stepped down following the allegations, and the company hired an outside firm to investigate, following the example of other companies plagued by corporate scandals like Uber.
Activision Blizzard also reached an $18 million settlement in September in response to a separate lawsuit from the U.S. Equal Employment Opportunity Commission. That lawsuit accused the company of subjecting female employees to sexual harassment and taking retaliation against them for complaining about the harassment, alleging that he had "discriminated against female employees because of their pregnancy".
advertising
Similar problems at Microsoft
The news follows several months of reports about allegations of inappropriate workplace behavior by Microsoft founder and former CEO Bill Gates in the company's early years.
Microsoft CEO Satya Nadella said last year that the company's culture had evolved since then, emphasizing its focus on diversity and inclusion.
"We believe that creative success and autonomy go hand in hand with treating each person with dignity and respect. We require every team and every leader to make this commitment," Phil Spencer, CEO of Microsoft Gaming, said in an official statement. on Tuesday. "We look forward to extending our culture of proactive inclusion to the great teams at Activision Blizzard."
The deal is pending regulatory review and Activision Blizzard shareholder approval, and is anticipated to close in 2023. The companies will continue to operate independently until the transaction is finalized, after which Activision Blizzard will notify Spencer.
Activision Blizzard shares soared more than 30% before the market opened on Tuesday morning;
Microsoft shares fell about 1.5%.
The importance of video games
Video games have become a major point of focus for Microsoft in recent years, especially as the pandemic meant more people were staying home and using gaming systems.
In January 2021, on the heels of high demand for its Xbox Series X and Series S consoles, Microsoft's gaming revenue surpassed $5 billion for the first time.
The acquisition would boost Microsoft's gaming business with the addition of Activision Blizzard video games and the nearly 400 million monthly active players that go with them.
Microsoft will also acquire Activision's global game studios and their nearly 10,000 employees, according to the company.
Clippy returns as an emoji 0:58
Microsoft's plans for cloud gaming will accelerate with the deal, and the company hopes to push the Xbox community onto phones, tablets, laptops and other devices globally.
And popular Activision titles like "Candy Crush" will also improve Microsoft's position in mobile gaming.
"The acquisition of Activision will help fuel MSFT's broader gaming efforts and ultimately its move into the metaverse with gaming being the metaverse's first monetization piece in our opinion," Wedbush analyst Dan Ives said. , in a statement on Tuesday.
the metaverse
The metaverse has been hailed as the next big thing for the tech industry;
Although there is still a long way to go before that virtual world becomes a reality, video games are likely to play a central role.
"Gaming is the most dynamic and exciting entertainment category on all platforms today and will play a key role in the development of metaverse platforms," Microsoft CEO Satya Nadella said in a statement.
The deal could face significant scrutiny both in the United States and abroad from lawmakers and regulators, who have recently focused on antitrust concerns in the big tech industry.
While Microsoft has received less attention in that regard than tech giants Facebook, Apple, Amazon and Google, the deal could put Microsoft back in the spotlight as it would make the company an even bigger player in the game industry.
Microsoft acquired the parent company of popular game developer Bethesda Softworks, ZeniMax, in September 2020, in a $7.5 billion deal that also boosted its Xbox Game Pass portfolio.
Candy Crush Microsoft
