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From: Sr K11/19/2021 12:43:47 AM
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Microsoft Pressures Activision Blizzard

Microsoft’s Xbox chief told employees the company is evaluating its relationship with the gaming company amid questions about its handling of sexual-misconduct issues

Activision Blizzard shares fell more than 2% Thursday and are down more than 10% since the Journal published an article Tuesday about issues at the gaming company.PHOTO: BING GUAN/BLOOMBERG NEWS

Sarah E. Needleman

Nov. 18, 2021 7:02 pm ET

Microsoft Corp.’s MSFT 0.63% videogame boss said the company is evaluating its relationship with Activision Blizzard Inc. ATVI -2.38%in the wake of a Wall Street Journal article about its chief executive’s handling of sexual-misconduct issues at the videogame company.

Xbox maker Microsoft made the remarks in a letter to employees Thursday, a day after the head of Sony Group Inc.’s SONY 0.75% PlayStation business said in a letter to that company’s employees that Sony has asked Activision how it plans to address the Journal’s reporting.

In the letter to employees, Phil Spencer, executive vice president of gaming at Microsoft, also said he personally has “strong values for a welcoming and inclusive environment for all of our employees at Xbox.” He added, “This is not a destination but a journey that we will always be on. The leadership at Xbox and Microsoft stand by our teams and support them in building a safer environment for all.”

Sony was Activision’s largest customer in 2020 and Microsoft was its fourth largest, accounting for 17% and 11% of revenue, respectively, according to a securities filing.

The Microsoft letter was earlier reported by Bloomberg.

The Journal’s article, published Tuesday, said Activision CEO Bobby Kotick didn’t inform the company’s board of directors about some reports of sexual misconduct by male employees toward female employees, including alleged rapes.

Activision issued a statement later that day saying the article paints “a misleading view of Activision Blizzard and our CEO” and that it “ignores important changes underway to make this the industry’s most welcoming and inclusive workplace.”

The company’s board released a statement shortly after, saying it “remains committed to the goal of making Activision Blizzard the most welcoming and inclusive company in the industry” and is “confident in Bobby Kotick’s leadership, commitment and ability to achieve these goals.”

A Journal spokesman said in response: “Nothing in Activision Blizzard’s statement challenges the facts in our reporting.”

Since then, the 10-person board has been talking daily about the article and its fallout, according to people with knowledge of the discussions. As chairman of the board, Mr. Kotick has been part of those discussions, the people said.

A spokeswoman for Activision said the company’s board doesn’t have any new statements.

More than 1,100 Activision employees, roughly 10% of the company’s workforce, signed an online petition Thursday demanding that Mr. Kotick resign, according to Valentine Powell, spokesperson for the ABK Workers Alliance. ABK refers to Activision Publishing, Blizzard Entertainment and King, the company’s three major business units responsible for making its Call of Duty, World of Warcraft and Candy Crush franchises, respectively.

The group also organized a protest Wednesday in which more than 100 current and former Activision employees demonstrated outside the company’s Irvine, Calif., campus.

A shareholders group that owns less than 1% of Activision also Wednesday called for Mr. Kotick to resign. SOC Investment Group, formerly known as the CtW Investment Group, further called for Activision Chairman Brian Kelly and lead independent director Robert J. Morgado to step down by year’s end, too.

Investment firms including J.P. Morgan, Benchmark Co. and R.W. Baird & Co. this week lowered their price targets for Activision’s stock.

Activision shares fell more than 2% Thursday to $62.67. They are down more than 10% since the Journal article was published this week and 30% since late July, when the California Department of Fair Employment and Housing filed a lawsuit alleging that the company ignored numerous complaints by female employees of harassment, discrimination and retaliation, citing what it called its “frat boy” culture. Activision, which is also being investigated by the Securities and Exchange Commission, is challenging the suit.

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