Microsoft agrees to pay $250m to settle lawsuit over Activision Blizzard deal

Microsoft will pay $250 million to settle a 2022 class action lawsuit filed by Swedish pension fund Sjunde AP-Fonden AP7, which aimed to block Microsoft’s $69 billion acquisition of Activision Blizzard.

The lawsuit alleged that CEO Bobby Kotick “rushed” the sale, thereby depriving shareholders of a better stock price than the $95 per share agreed to by Microsoft.

Both parties denied the allegations. Microsoft said it settled to avoid the “distraction of litigation,” while AP7 considered the payment “fair.”

A preliminary settlement filed last week in Delaware’s Court of Chancery (via Game File), which is pending final court approval, states Microsoft will fund 40% of the settlement, with the remaining 60% covered by directors’ and officers’ liability insurance. The payment equals about 30 cents per Activision Blizzard share.

Microsoft’s statement in the filing:

“Microsoft does not substantiate any allegations that there has been systemic or widespread workplace misconduct at Activision; that Activision senior executives ignored, condoned, or tolerated a culture of systemic harassment, retaliation, or discrimination; or that Activision’s Board of Directors, including its CEO, Kotick, acted improperly with regard to the handling of any instances of workplace misconduct.”

Kotick had alleged that the AP7 suit was linked to Swedish conglomerate Embracer, referring to AP7 executive Emma Ihre who had previously worked at the firm. His lawyers described the lawsuit as a “collateral attack on Activision [that] also appears to be tied to Embracer’s desire to boost sales of its games while leaving Activision Blizzard hamstrung in the development of its own games that competed against Embracer’s titles.”

Embracer denied these claims. “There [was] no coordination or collaboration between Embracer and AP7 relating to any of Mr Kotick’s statements,” it said. “No agenda or instructions were directed from Embracer via Emma Ihre or directly to AP7.”

In the latest settlement, AP7 stated the California Civil Rights Department (CRD) admitted its claims, laid out in the 2021 sexual misconduct and discrimination lawsuit it brought against Activision Blizzard, had not been “substantiated.”

“Plaintiff acknowledges that its original claims were based in part on media reporting and characterisations of allegations made by the CRD, which itself admitted in a court-approved consent decree have never been ‘substantiated’ by any ‘court or independent investigation’ and now have been expressly withdrawn.”

The settlement also included a statement from the CRD:

“No court or any independent investigation has substantiated any allegations that: there has been systemic or widespread sexual harassment at Activision Blizzard [or] that Activision Blizzard senior executives ignored, condoned, or tolerated a culture of systemic harassment, retaliation, or discrimination.”

The acquisition completed in October 2023, following the conclusion of an investigation by the UK’s Competition and Markets Authority.