US senators call ‘unacceptable’ lack of responsibility for Bobby Kotick in Microsoft purchase

US Senators Elizabeth Warren, Bernie Sanders, Cory Booker and Sheldon Whitehouse have sent a letter to FTC Chair Lina Khan, asking her to investigate whether Microsoft’s planned acquisition of Activision Blizzard could worsen working conditions at the company. The letter, released by the Wall Street Journalalso calls CEO Bobby Kotick’s ongoing role in the company a “golden parachute”, saying that failing to hold him accountable for the workplace culture he has allowed to flourish “would be an unacceptable outcome” of the acquisition.

“Activision Blizzard workers, after years of rampant sexual misconduct and discrimination and unfair labor practices, have led calls for greater transparency and accountability in the gaming industry, and we are deeply concerned that this acquisition could further deprive these workers and prevent their voices being heard,” the letter states.

“As this proposed settlement moves forward through the review process, the Federal Trade Commission (FTC) must assess whether the ways in which these companies have failed to protect the rights and dignity of their workers are motivated by monopsony power or amount to harm. anticompetitive in our labor market and, if so, whether the merger will exacerbate these problems”.

The letter makes a specific reference to the reported “frat boy” culture at Activision Blizzard, and its recently completed $18 million deal with the California EEOC arising from complaints of sexual harassment and discrimination at the company. He also notes that Activision Blizzard is facing a U.S. Securities and Exchange investigation into how to handle complaints of workplace misconduct and that despite his allegations to the contrary, Kotick was in fact aware of at least some allegations of sexual misconduct complaints, “including alleged assaults”, and has not reported them to the board of directors or industry regulators.

the situation of quality control workers is also noteworthy: the letter describes them as “undervalued and exploited”, working under contracts that pay less than the minimum wage and subject to arbitrary dismissal.

Interestingly, although Microsoft has at least nominally introduced itself as the good guy of this merger, most recently saying that “won’t get in the way” of Activision Blizzard’s unionization efforts, senators seem unimpressed, calling the proposed takeover “a cynical and ‘opportunistic’ attempt to capitalize on systemic issues” of the company. interference with unionization efforts, saying the compromise is “so that leaves several ways for Microsoft to undermine the unionization process and its outcome”.

But Kotick is clearly the main target of the senators’ ire. The letter says that more than 1,800 Activision Blizzard employees have signed a letter urging him to step down, but Microsoft is “protecting” him under the terms of the acquisition, keeping him as CEO until at least 2023 and guaranteeing him a big payday if and when he leaves.

“This lack of accountability, despite shareholders, employees and the public calling for Kotick to be held accountable for the culture he created, would be an unacceptable result of the proposed acquisition of Microsoft.”

The full letter was shared on Twitter by Stephen Totilo of Axios:

To be clear, an FTC investigation into the proposed acquisition will happen– is required. But the letter suggests the process could be more difficult than anticipated. The general consensus earlier this year was that there could be “some drama”, but that approval was likely to happenBut this letter could increase pressure on the FTC to back down, especially as the Biden administration in 2021 expressed interest in increasing antitrust enforcement “to address the challenges posed by new industries and technologies.”

A rejection of the deal by the FTC would not be unprecedented either. In December 2021, sued Nvidia to stop its proposed takeover of UK-based chip designer Arm, which ended up contributing to Nvidia’s decision to stop the acquisition effort.

“The FTC should consider the history described above [in the letter] by evaluating the anti-competitive effects that this massive merger may have and carefully determining the meaning of Microsoft’s promise to ‘not hamper’ unionization efforts,” the letter concludes. “If the FTC determines that the transaction is likely to increase monopsony power and worsen the negotiating position between the workers and the parties to this agreement, we ask that you object.”

In an email sent to PC Gamer, an Activision Blizzard spokesperson noted the company’s recent approval of the EEOC agreement and said that the acquisition of Microsoft “will not disrupt any of the actions that Activision Blizzard’s leadership team has implemented over the years.” 2021 and continues to implement in 2022 with regards to improving our workplace.

“Activision Blizzard’s leadership team has discussed the company’s goals in detail with Microsoft, and Microsoft has reviewed the renewed cultural commitment and actions that Activision Blizzard has taken so far and the efforts it has undertaken,” the spokesperson said. “Microsoft supports the goals and the work being done. This is an attractive transaction for all stakeholders, including employees.”

“No additional special compensation arrangements for Mr. Kotick have been entered into in connection with the transaction. Mr. Kotick’s base salary has been reduced to the California minimum annual wage (which is approximately $62,500 for 2022), and he has not will receive no bonus or stock donations until the Activision Blizzard Board of Directors’ Workplace Responsibility Committee determines that Activision Blizzard has made appropriate progress toward achieving the gender-related transformational goals and other commitments outlined in such announcement.”

I contacted Microsoft for comment and will update if I get a response.

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