Things are heating up around Activision Blizzard. As the company has been running damage control ever since the DFEH filed a lawsuit against the company back in July, it seems as the worst is yet to come. A federal investigation has just been launched with the Securities and Exchange Commission getting involved, and subpoenas have been issued to Bobby Kotick and other executives.
The road leading up to this development has been long and messy. Based on the incendiary response to the initial lawsuit from Executive Vice President for Corporate Affairs, Corporate Secretary, and Chief Compliance Officer Frances Townsend, the offenses and abuses the lawsuit is about stretch back a decade.
Activision Blizzard hasn't been doing itself any favors since the news of the lawsuit broke. The initial response was dismissive and disrespectful of the harm employees suffered, which didn't help turn the public opinion - already against ActiBlizz - to their side, and incepted a walk-out from Activision Blizzard offices.
In the months since the whole situation began, the pace of game development at Blizzard has slowed down, reveal events were scaled back or shuffled around and players started protesting in-game. References to those named in the lawsuit as harassers have been scrubbed from games, notably World of Warcraft and Overwatch. A number of personnel changes saw the departure of people like J. Allen Brack, and most recently chief legal officer Claire Hart also left the company.
Bobby Kotick, who only addressed the lawsuit at all after the fallout caused the company shares to drop significantly, announced that he had hired a law firm with a history of union-busting tactics and placing corporate interests ahead of employee interests to review company policy. Employees were encouraged to approach WilmerHale in confidence.
Meanwhile, the DFEH lawsuit was expanded as time went on. Additional testimonies of harassment were added as employees who previously remained silent in fear of retaliation were encouraged by the momentum of the lawsuit to speak out. Additionally, the DFEH accused Activision Blizzard of destroying evidence and introducing new non-disclosure clauses in contracts to prevent employees from speaking with officials.
On the PR side of things, the whole debacle has caused criticism to spill in from every direction. Aside of the outrage caused by the improper response to the lawsuit, Activision Blizzard's subsequent actions have also drawn additional ire - those named in the lawsuit are leaving the company, but not once has the real cause been acknowledged. References are being scrubbed from games, but that is seen as a mere diversionary tactic when the company is hindering the investigation in the background.
Other than fans, others closer to the company have also made moves. An Activision Blizzard shareholder also filed a lawsuit due to the drop in stock value that followed the lawsuit, and an employee group "A Better ABK" worked together with the Communication Workers of America union to accuse the company of intimidating employees into staying silent about harassment related issues.
Gamers aren't the only one dissatisfied with how the company is handling the situation, it seems - as per a recent Wall Street Journal report, the legal battle has reached a new height. A federal investigation has been launched specifically into how Activision Blizzard has responded to the DFEH's sexual harassment lawsuit.
The investigation, headed by the Securities and Exchange Commission, was likely triggered by the recent accusation of the company destroying evidence and suppressing communication between employees and government officials. Additionally, one of the stated goals of the investigation is 'whether any of that information should have been shared earlier with investors and other parties,' which seems to be related to the shareholder lawsuit.
As part of the new investigation, CEO Bobby Kotick - under whose leadership these offenses were allowed to happen - has been subpoenaed alongside other executives. The SEC is also seeking recordings and documents from board meetings since 2019, the files of six former employees, and separation agreements that were updated in 2021 to reflect new non-disclosure clauses.
The subpoena documents sent to Kotick also require the handing over of records involving the CEO's communication about harassment complaints with other executives. According to an Activision spokesperson, the investigation is looking at “the company’s disclosures regarding employment matters and related issues.”
Activision's statement also states that the company is cooperating with the SEC - something they also claimed to do with the DFEH, right before the latter accused them of shredding documents and deleting e-mails relevant to the investigation while threatening employees to keep them quiet.
The involvement of the SEC and issuing of subpoenas adds a whole lot more weight to the lawsuit than before, and the chances of actual meaningful change taking place at the company have increased. That said, the SEC's foundational goal is to protect the interests of investors, and its involvement is more a result of the lawsuit impacting stock value, rather than the wellbeing of employees.
Even so, if the investigation leads to an improvement of working conditions at Activision Blizzard and an end to the 'frat boy culture' that led to widespread harassment just to maintain a stable stock value, it's still a win. It may be for the wrong reasons, but these days you've got to take all the wins you can get against corporations encroaching upon the rights of individuals.
Activision Blizzard is ahead of several major game releases, and despite the widespread publicity of the lawsuit, these upcoming titles don't seem to be suffering from any decrease in anticipation and popularity.