Wall Street Journal reporter Kirsten Grind helped expose Activision Blizzard’s troubled corporate culture in a bombshell article in November, co-written with her colleagues Ben Fritz and Sarah Needleman. The article revealed that Activision CEO Bobby Kotick knew about the company’s sexual misconduct problems, including an alleged rape, and, in some cases, did not report the incidents to Activision’s board of directors.
Then in January Microsoft moved to pay $75 billion in cash to buy the video games company — a 45% premium over Activision depressed share price.
The acquisition could help Activision respond to a slew of investigations and legal challenges over its corporate culture. The deal gives Kotick a graceful exit from the gaming giant that he helped build.
Tom Dotan, Katie Benner, and I talked to Grind about her investigation into Activision for this week’s Dead Cat podcast. Then we weigh the merits of Microsoft’s bid. Spoiler: We think it’s a steal for Microsoft.
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00:00:05
Welcome everybody, Welcome to Dead cat.
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This is Tom here joined by Eric and our guests Kirsten grind of
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the Wall Street Journal. Kirsten has been behind a number
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of very big stories in the business and gaming and Tech
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World about Activision. First detailing, the The
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cultural problems that the company had had related to a
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culture of sexual harassment and ultimately proving that it's
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CEO. Bobby kotick was very aware of
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it and did not inform the board of the cultural problem.
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And we've complained on this podcast, that story was amazing
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but wasn't at we thought I should be even more seismic.
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But given, you know, the gaming industry was a little bit.
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Wasn't, you know, it wasn't as if it was like an apple or
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something. But then thankfully, we have the
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Microsoft acquisition which is like, really put this at the
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Activision story at the center of culture right now.
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So it's an interesting anyway, sorry to interrupt but I just
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thought it was interesting that we'd sort of been like this ya
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yuge storyline. Yeah, it's a good point because
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yes, it was a huge story. You know, we were, I was fixated
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on it because I was one, you know, the details within it were
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just so unbelievable in a good way.
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But also the fact that it wasn't, you know, it Like if
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this were an apple, If This Were a Facebook and we were talking
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about this level of dysfunction that connected to the CEO, I
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thought it would have been way bigger story, so it's a lot to
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cover here. First of all, thanks for thanks
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for joining us. Kirsten a nice to meet you.
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We hadn't met before this. Thanks so much for having me.
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Yeah, haven't met you guys but happy to be here.
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So I guess, you know, before we started recording, we were kind
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of talking about how you even came to be on the story because
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you are not a video games reporter, you're, you know, not
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even really a tech reporter on in your day-to-day basis.
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But you kind of you're like a secret agent.
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Gets called into, like, you know, handle the big stuff.
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So what was your first like introduction to Activision and
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this piece that you, you know, ended up, you know, helping to
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break. Yeah, that's funny.
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You say, you make that comparison because I often think
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of my editor as my Handler, he is actually the one that will
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often say, oh my gosh, I think we need to go bigger on this.
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And that's exactly how I ended up at Activision.
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Kirsten doesn't get out of bed unless she's got at least.
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A chance at a lobe don't waste your time.
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Yeah. I just want to get one thing out
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of the way early, which is that I don't play video games and I
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had Eric. And Alicia, we can we can handle
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that part of the okay, good. So, yeah, that's that's
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definitely one of the challenges of my job is.
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I parachute into areas, but I don't know a lot about so II.
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Certainly realized how Killer Activision games where but I
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can't say, I play World of Warcraft.
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Unfortunately, there was a lawsuit or what was your entry
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point, the activation story. So, last last July, I actually
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happen to be on book, leave and the state Regulators in
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California filed. This very unusual lawsuit
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against Activision and it was salacious the details, you know,
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it describe this really awful. That boy, culture and
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Activision, which is based, by the way in Santa Monica.
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And it talked about all this gender pay disparity and sexual
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harassment allegations and it just kind of blew up and
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employees were so upset. They staged a walkout.
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They were upset with how the company kind of messaged around
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the lawsuit basically, like tossing it aside, right.
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Like these are untrue allegations.
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All of this stuff a couple months later.
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So In September, it would come out that the equal employment
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opportunity commission. Also had been investigating for
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a couple years but hadn't made it public, but they were
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investigating much of the same stuff like all these sexual
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harassment and assault allegations and and also we're
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looking into it. So it just kind of that is the
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moment when we were sort of like what is going on here.
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And I remember my editor said to me, you know, we should really
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Really look at like what the CEO.
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He's this the most highly paid CEO Lobby in America.
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Yeah, the Ecotech famously, you know, crazy compensation, even
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at CEO levels. Definitely had had built the
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company had been there more than 30 years, like what do you know
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about this? Like how did he handle the
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situation and that kind of sparked the whole thing for us?
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Right? Because that is always the
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question with these workplace culture.
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Yes, you know the thing. About these stories as you sort
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of know going into it, at some level, of course, the CEO rarely
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is there a case where the CEO doesn't know something?
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I think, but it's all about the details, right?
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And that's what's really hard to nail down.
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It's really hard to figure out exactly what was happening.
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Especially when a boardroom is involved, I find.
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So it was not easy reporting for sure.
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Did you go into it with the That these were acts and a culture
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that Bobby knew about. I mean, you always kind of to go
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into reporting with some sort of assumption, maybe it is improved
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out by it. But like, what was your gut
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instinct as you began talking to people?
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So I totally agree with you on that.
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I do have to say again going back to how I Tara shoot into
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things. I truly knew really nothing
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about Bobby kotick and so I actually had no assumptions.
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I remember Early on. I did sort of start to think he
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must have known because people were describing his management
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style as knowing definitely everything that's going on
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across his company even though and and controls, right?
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Yes, even though there's about 10 employees that Activision
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and all these different Studios and units and he definitely was
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not managing the culture of each of those units.
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But he knew, you know, what was going on.
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On there. And so I pretty early on started
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to thank. Yeah, he probably knew and I
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also pulled in, oh my gosh, we have this great reporter from
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the LA Times. He's now an editor been Frets
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but he and our video games. Reporter, Sarah, needleman we
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were all working on this for sure.
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So obviously, you know, it's a very Wall Street Journal story
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and that you get to a new paragraph and there's some new
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very specific, damning investigation.
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And but like, in the broadest Strokes, like, you know, if
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feels like, okay, A company that had a huge alcohol called sure
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that caused a lot of problems was, you know, the CEO is sort
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of helping people either slide out quietly without making a big
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deal about sexual harassment. Allegations, this was an angry
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CEO who with like his own assistants had allegations that
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he was mistreating them and had a sexual harassment, allegation
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tied to him too, and then there's the whole board level to
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it. So I, I've sort of given my
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effort, but how would you like some up this story?
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There are so many pieces to it. Like what's the central Hub of
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the issue at Activision? Well, I think one of the one of
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the main issues that we were kind of showing there was that
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he was part of the issue, right? He knew and it wasn't telling
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the board, right? We also have, you know, details
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in there about yes, and threatening his assistant and a
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voicemail to have her killed, you know, when he was trying to
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clean house after, July lawsuit. He made a bunch of changes,
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right? At the top.
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He put in a female executive. This woman Jen O'Neal.
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Yeah, I thought that was one of the most damning Parts.
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Yeah. And see.
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Immediately was like, well, he's part of the problem and this
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internal email, right? The top female executive right?
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She leads blizzard Cochise desert and then she asks is it
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doesn't believe in the company anymore either.
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Exactly. And so she points to this
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incident going back to 2007, basically.
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He saying, well, he went to this party with scantily clad women
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just just an indication of he was allowing this culture.
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So I mean that's what we were kind of saying in the story and
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and I should, of course, say that the company called her
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reporting misleading, we interviewed Bobby kotick for the
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story. He said he was transparent with
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the board. The board has stuck by him every
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inch of this way. The board part is funny.
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I mean, obviously it's all very Bleak, but If I were on the
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board, you know, hopefully I would be a good board member but
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on some level, it's like, yes, thank you for not telling me
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about these terrible things that would have implicated me.
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I was always a cop. I mean, just like in terms of,
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like, Sting way to look at it, I hadn't thought about it like
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that. Yeah, governance of companies,
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you know, like so many longtime CEOs, like Bobby kotick, like
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putting people who are super loyal to them, I don't know the
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Activision board specifically. But, you know, I've done, I did
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a story on Elon Musk. Ask allegedly like shoving one
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of his employees and the board, like investigated it.
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And that's another sort of loyalists board.
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So I'm just very attuned to how these the stories with the
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board. Because we have, I think you
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have this idea that like a board.
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They're responsible but like, I don't know.
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Well, what do you think? The significance of him, keeping
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it from the board? Like, do you think he would have
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been removed if the board would have been there, or I'm curious
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why you chose to focus on the board part of the zoo, Well, I
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think because and we also kind of make the point he didn't make
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things public either, right? Like the EEOC probe, for
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example, that's something that other companies may have chosen
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to could be mature, security is filing, right?
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But the board is an interesting one.
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I've thought a lot about this and we've written about this
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too. I mean, and shareholders have
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been complaining about this. I mean, listen, this is a board
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that many of them have known Bobby for a long time.
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The chairman has brought Been there over 20 years, the
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independent quote-unquote director has been there over 20
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years and this is something that like shareholders were
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complaining about two for sure. So one of the reasons we focused
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on the board is because we wanted to show what action Bobby
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had taken. And that is like one of the
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number one things that he should have done is inform the board.
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Right now, the question of, you know, what the board should have
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done or whether They were truly independent.
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I think that's still playing out, right?
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I think. I think they're still going to
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get scrutiny. For sure.
00:11:07
What's interesting to me about this particular story especially
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as it ends up in in the sale to Microsoft which we can talk
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about in a second is the fact that Activision the business is
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doing well, yes they are missing money.
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I mean they are, I think maybe below EA and Ten Cent and I
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don't know how you want to categorize the gaming industry.
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Like one of the largest gaming companies their games maybe are
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slightly cool. In off their major titles, but
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they're still enormously profitable and you know, like
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Eric you covered Uber through its non-public but, you know,
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like it wasn't a public company yet but you know that that
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business also had issues right. Like, there were lots of
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questions about its losses and you could sort of see business
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problems, really cropping up with totally.
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There's an argument that at the time that the scandals at Uber
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only sort of dislodge, Callen it because there were business
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problems. So the board had an incentive to
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say, maybe we should change Leadership and Activision in
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some ways is the counter or proves the point, which is that
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even if there are lots of scandals.
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But if you have a very profitable company, you know,
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boards happy to keep the CEO and place.
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Exactly, and it's funny. Like, let's go back to that
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alcohol, issue and Activision, right?
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I mean, this is kind of case in point with that.
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At one point we had heard about how some people didn't want
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alcohol in the office, right? But they wanted to keep it
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because some of the game designers and developers really
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thought, it'd help them fill these games.
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And so, you can see, I mean, honestly, like at an executive
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level, you just want the game's right?
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Like you just huge. And so this was a truly a
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debate. A lot of people would say to me,
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I just don't understand why they're allowing alcohol in the
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office and it's because it was producing amazing product, you
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know, the so the argument went, I mean like, look the same Issue
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played out a couple years earlier in Hollywood and in that
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side of the entertainment industry, when finally enough
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people decided, yeah, the casting couch, the sexual
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harassment, the usage of power in order to cast favored people
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into roles is actually not an essential part of making TV
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shows and movies and actually is just textbook harassment and I
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really can clean these things up.
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So there is I mean maybe just again bring back to this idea
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that gaming has not entered the mainstream in the same way that
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other things have it was Allowed to happen for a couple more
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years in the gaming world when it's essentially the same issue,
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right? It's people claiming cultural
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necessities of mistreatment of people.
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When in fact it's just straight up immoral.
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That's the exactly right? Yeah, I agree.
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Okay. Katie, just dropped in.
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Now, Katie was working on a piece but she is now in the
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convo with Kirsten. I know, Katie and Eric, and I
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before you were doing like, in the days, leading up to this, we
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kept going on and on about Bobby as a character and we definitely
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want it to Talked about him already a bit.
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But I mean Katie you had a lot of thoughts about Bobby.
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Some not expressible on this podcast, right?
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What's interesting to him about me is that he's kind of a
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celebrity CEO, right? And it's, you know, he supported
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Sheryl Sandberg. He was always very out there, he
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loved being at conferences. He wanted everybody to know who
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he was. So I mean, I guess, one of the
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things we would love to know is what was it?
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Like one just to report on him. Especially somebody who would
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love the media so much and did any part of his response to the
00:14:35
allegations that were happening in his own company, surprise,
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you. That's a really good question.
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So, Katie I was telling these guys earlier, I jump into story
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so I actually did not know that much about Bobby ahead of time
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but quickly realized. Yes he is a celebrity clearly
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although I would kind of argue he's like an understated
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celebrity like he's not like obviously.
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I think he wants to be but maybe not as well known as someone at
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one of the other day. He's not Mark Zuckerberg.
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Yeah, he's like he's like a b-list celebrities but he's
00:15:08
friends with lots of alien - yeah.
00:15:12
But what's his name? Like Robert Kraft, the owner of
00:15:18
the Patriots, everyone in heart really goes out.
00:15:21
Yeah, yeah, yeah. Like is he does he have a
00:15:27
reality Distortion field? Are you at least?
00:15:29
Like, wow, I can see why this guy runs the show.
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It's such a performance or what see, I could see that, you know,
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I finally got to interview him and I, to be honest, found him
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to be very charismatic and like, clearly knew his clearly is a
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brilliant businessman. That much is clear.
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I just think that he may be lost sight, for sure of the culture
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that was going on at his own company.
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So, um, which we've reported on. Yeah, the culture, obviously,
00:16:05
terrible in that story is so everybody should go read.
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It is so thorough. It's hard, you tie so much to
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him in ways that would be impossible for most companies.
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The one thing I want to be and you're I don't think you've made
00:16:18
this a big issue, but in the culture and we've sort of
00:16:20
reference it, the, the compensation piece of it, like
00:16:23
the complaint that he makes so much money.
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I'm curious. I mean, he basically built the
00:16:29
company P'nay from like nothing, right?
00:16:31
He bought it with some workers out of bankruptcy.
00:16:34
I mean, it isn't some piece of his like, enormous compensation.
00:16:37
Just tied to how much the company like lives or dies by
00:16:41
this one was sort of willed it into being I don't feel like
00:16:45
hmm, complaint. That's an interesting way to but
00:16:49
that's a complaint. Yeah, I definitely see this.
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A lot of people in the gaming world.
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I think complain about playing. Yeah.
00:16:56
So the funny thing about that will funny maybe is not the
00:16:59
right Word. But as you can imagine our
00:17:02
process for getting common is extensive and scrupulous at the
00:17:05
journal. So these guys had quite a long
00:17:07
time to respond. And so, in between that area.
00:17:11
Well, after we went to them with a lot of questions, he told
00:17:14
employees he was going to cut his salary, so now he is going
00:17:19
to make 62 thousand dollars. So I barely spread out longer,
00:17:24
right? Yeah.
00:17:25
That I would say with him though, you know, in the story
00:17:28
that you guys wrote, you know, detailing the acquisition, which
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I want to talk about in a sec. I think you said that, you know,
00:17:34
and it's expected that he will leave the company after, like, a
00:17:37
year at or after the deal with Microsoft closes and they're
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saying, you know, if he were to sell all of his shares, you
00:17:42
know, the amount that he owns he's worth four hundred million
00:17:45
dollars, which my first instinct was like, that's not that much
00:17:48
actually no, it's not that much. You know I I have to say we're
00:17:52
still like trying to wrap our heads around that.
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I'm gonna have to look into that because I think my suspicions
00:17:59
Out knowing is that it's probably more but I think, I
00:18:03
don't know for sure. Yeah.
00:18:05
But he got something much bigger out of that deal than money,
00:18:08
which is that he got to exit, a very bad situation for him and
00:18:12
look amazing. Right?
00:18:15
How did he manage to get that deal?
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And what do you think? Like, how did why was that deal
00:18:19
given to him? How did the board?
00:18:21
See it. Why does it benefit the company?
00:18:23
Well, I I actually think it's a really beneficial deal to be
00:18:27
honest. It with all the Crap to put it
00:18:31
nicely, they are they have been dealing with.
00:18:35
So as we kind of reported, like the deal came about.
00:18:39
So we are story came out like mid-november.
00:18:42
There was a huge outcry among employees shareholders, like
00:18:46
they were under so much pressure.
00:18:49
How much did the stock drop total?
00:18:51
It had been down about 30% since the July lawsuit, I believe,
00:18:56
after our story ran at drop like 20% in two weeks, There's
00:18:59
something. Wow.
00:19:00
And employees were calling for him to resign like twenty
00:19:04
nineteen percent of employees or something.
00:19:06
There was a walkout analysts were calling for him to step
00:19:11
down shareholders. I mean, it was just like he was
00:19:14
in a terrible position and Microsoft had been interested in
00:19:19
Activision before, but Bobby is an acquirer.
00:19:23
He is not someone that sells right?
00:19:26
And I cannot overstate and Enough.
00:19:30
How much Activision was like? His is like his, his child,
00:19:34
like, this is a company that he grew.
00:19:37
He loves this company. He's been at the home over 30
00:19:40
years, but like he was in the situation and as we reported
00:19:46
like board members, they, you know, had always supported him
00:19:50
and they continue to support him publicly but they were starting
00:19:53
to get a little anxious to write and Microsoft comes in with an
00:19:58
offer. And it's a good offer, right?
00:20:01
Well, the offers basically 45 percent above the current stock
00:20:06
price, but in an acquisition, you're always going to stop
00:20:09
right down, right? So it's like, of course, you
00:20:12
have to give above the current price.
00:20:15
But, you know, you're buying a company that's sort of
00:20:17
artificially depressed. It's like, depressed and its
00:20:21
current situation, but to an acquirer, you can getting rid of
00:20:24
the perception that there are Bad actors and move on and
00:20:27
apologize, and say that was the old guys.
00:20:29
Then it's a valuable company to you because it doesn't have sort
00:20:32
of those old problems. So you can slightly so wonderful
00:20:35
acquisition. Absolutely.
00:20:37
But the funny thing about Microsoft as the acquirer is
00:20:40
that, they were also part of the reason that the stock was
00:20:43
depressed because he because they came out right, bad?
00:20:48
Like what the hell right right. And they make, you know, a major
00:20:51
console that Activision sells games for and they told
00:20:55
Activision like you guys better shape up because if you don't
00:20:58
like we may consider taking Action.
00:21:00
And that's like, I'm sure investors were like, well,
00:21:01
that's not good. Yeah, exactly.
00:21:05
And they weren't the only ones. I mean, Sony said that to and
00:21:08
recently llego some that look well lay ago, you know, the
00:21:13
real, the real world, I wouldn't take what I say seriously, but
00:21:18
they were definitely getting business partner, pressure for
00:21:21
sure. So, but the funny thing about
00:21:23
this sale is that there are sort of two narratives right now.
00:21:25
One that the company is trying to sell in the one that you guys
00:21:28
are probably a Accurately reporting, that's my opinion and
00:21:31
Activision's lion. Like I saw Bobby giving a couple
00:21:34
interviews to you guys and to venturebeat is basically saying
00:21:37
it's tough out here. You know, there are these
00:21:39
trillion dollar companies and they have the AI, and we don't
00:21:42
have the AI, and you need to have that in the machine
00:21:45
learnings and the engineers. And you know, I mean, listen,
00:21:50
just when you see that just keep reminding yourself how much
00:21:54
Bobby loved this company and there was Microsoft had been in
00:21:59
Before right and he never wanted to sell to them, right?
00:22:03
So that we've seen that story line.
00:22:07
Yeah. Right.
00:22:08
Yeah. Just like the assessment on
00:22:10
Microsoft like, on some way. They're like opportunistic here.
00:22:13
There's been like just as they were criticizing Activision.
00:22:18
They were talking through the deal.
00:22:20
I don't know if I have an objection to that necessarily
00:22:22
like as long as Microsoft does clean it up.
00:22:26
I don't know if I care that they play games friendship.
00:22:28
I don't know. Do you have a point of view on
00:22:30
sort of Microsoft is like an actor here and whether they
00:22:34
there's anything wrong with them sort of criticizing the company
00:22:38
as they're trying to buy it. Or I don't know if you have a
00:22:40
view or you talk to people as strong points of huh.
00:22:43
No, I mean I think I have a strong point of view but I do
00:22:46
think it. I mean Microsoft was pretty
00:22:48
smart here. I mean 100%, you know, this is a
00:22:53
great deal for them, I think. One thing that I that we haven't
00:22:58
really touched on that. I still have it.
00:23:00
The back of my head is I mean they still are facing.
00:23:03
Activision is regulatory investigations right?
00:23:07
I mean the Securities and Exchange Commission that just
00:23:11
happened in the fall. The state Regulators, the
00:23:14
California state Regulators. I mean that does clearly does
00:23:19
not seem to be ending anytime soon and they tried to come to a
00:23:24
deal with the EEOC that Go employment opportunity
00:23:27
commission last fall still hasn't been approved.
00:23:31
So I mean, this is all stuff that Microsoft I suppose is
00:23:36
going to have to, you know, deal with right.
00:23:40
But they can deal with that. That that I'm sure they thought
00:23:43
about that. But it's all they had to do is
00:23:45
Google it, right Kirsten. Do you think that the Microsoft
00:23:48
deal and making the deal is, does Microsoft have a better
00:23:51
chance of coming to settlements with these Regulators?
00:23:54
Because they can say we're coming, In from the outside, we
00:23:57
will bring accountability, we will bring in, you know, whether
00:24:00
it's an outside Law Firm to do a full investigation.
00:24:03
Whatever it is that they could more credibly make a promise.
00:24:05
Like how do you think of Microsoft's acquisition could
00:24:08
impact these investigations? Yeah, that's a really good
00:24:12
question. I, I wish I knew more about that
00:24:15
but I sort of think the deal definitely does help them.
00:24:20
And one aspect of that, that probably helps at least and this
00:24:25
is, I Want to be clear speculation with Bobby the SEC
00:24:31
clearly seems to be after what, Bobby and other Executives knew
00:24:36
about these cases. And so, Bobby not staying after
00:24:40
the acquisition. I mean, I can't imagine that's
00:24:43
not a point. Microsoft, is, is going to turn
00:24:46
to, right? And also just to be clear like
00:24:49
this acquisition, you know, if it closes knock on wood, it's
00:24:53
going to be like a year over a year.
00:24:56
Like it's still going to be those guys dealing with this.
00:25:00
They told him. Activision told employees. 2023
00:25:02
basically. Yeah.
00:25:03
They think this will. Yes and I mean whatever hurdles
00:25:08
they may face from antitrust Regulators.
00:25:11
Whatever my point being Activision still going to be
00:25:15
dealing with these investigations in the meantime,
00:25:17
right? It's not really going to be
00:25:19
Microsoft for a while, I think. I hope so.
00:25:22
And kotick is not meant to stay at Microsoft at When is the
00:25:26
conclusion or right? No, no, no.
00:25:29
He is not someone who would work for someone else.
00:25:32
No. Yeah, but I don't know if you
00:25:36
guys read about Microsoft, press release.
00:25:40
I mean, I read when the opposition first came out, I
00:25:44
read it. I must admit.
00:25:45
It was early in the morning. I had not had my coffee yet, but
00:25:48
it clearly to me said he was staying.
00:25:51
But if you look at the wording, we point this out in one of our
00:25:54
stories. It's It's very like wishy-washy.
00:25:59
All say about what is actually happening to him after the deal
00:26:04
closes the line that companies always use with that is is
00:26:07
staying on as an advisor. Yeah.
00:26:10
But they didn't even say it even say that they definitely don't
00:26:13
even want to look at it. It looks like he's going to be
00:26:21
an employee of fell Spencer's and Microsoft, right?
00:26:24
Like he's going to Port to happen when clearly that's not
00:26:28
what if there's anything I feel like I've learned about this
00:26:30
deal deal stuff, it's like sure, they'll negotiate, the actual
00:26:35
like control which is like we get to decide whether you stay
00:26:38
and then as part of the negotiation will negotiate the
00:26:40
language, which is like irrelevant when you give someone
00:26:43
else to control. So then the language is often
00:26:45
just like meaningless relative to the actual disease.
00:26:48
It's not a relevant to the people who they're talking
00:26:50
about, that's all they care. They run, they get to feel like
00:26:53
they won on language even though the Stay all the stories, say
00:26:57
the opposite because like the leaks came out.
00:27:00
That's exactly right, right. Exactly right.
00:27:03
Well, the same thing happened, if you guys remember Crazy
00:27:06
Summer of 2020, when Tick-Tock was going to be selling to
00:27:09
Microsoft. I got.
00:27:27
That was a weird summer. Yeah, but but part of in I had
00:27:33
to write some of those stories and part of the craziest aspect
00:27:36
when that deal, I mean like until the 11th Hour, felt like
00:27:39
it was going to go through was that Kevin mayor?
00:27:42
Who is this Disney executive that had hopped over to become
00:27:44
the CEO of tick-tock, which was always an ill-fated marriage was
00:27:50
like, well, this guy would never work for Microsoft.
00:27:53
This comes to be a CEO. He left to become Come the CEO
00:27:56
of tick-tock not like, you know, three ranks below Satya Nadella.
00:28:01
So yeah guys can't they can't stomach that at all.
00:28:04
It almost Bobby is like going to run Microsoft.
00:28:08
Like he's not just going to run a division or like Dy like games
00:28:15
officer. I don't know what they call it
00:28:17
there. That's not that's not going to
00:28:19
look good on Riya. He can't do that.
00:28:23
I'm skeptical. This gets Derailed by antitrust
00:28:27
Regulators. I feel like it's important
00:28:30
story. Everybody's talking about it.
00:28:31
Like, what is your, you think it well, or at?
00:28:34
Well, I think I'll go through. I mean, first of all, I mean
00:28:37
there's been a lot of reporting saying that, you know, Microsoft
00:28:40
has a good relationship in Washington.
00:28:41
They're not over the largest game company.
00:28:44
I mean, it's sort of a competitive space idea.
00:28:48
It's kind of like this isn't like to Airlines merging.
00:28:52
We're right at the same time though like you know, Bobby
00:28:55
going around Saying we couldn't hack it because we're only ass,
00:28:58
you know, worth set, you know, sixty or seventy billion
00:29:01
dollars. To Microsoft, we're not big
00:29:02
enough. We need trillion dollar
00:29:04
companies to run things these days.
00:29:06
It doesn't exactly Inspire confidence in like the health of
00:29:08
our business right now. It's like I don't say that's not
00:29:11
necessarily it seems like Shameless antitrust positioning
00:29:14
just like just yeah obviously, right after a deal.
00:29:17
This guy of antitrust review, if the regulator stop this, I might
00:29:22
be able to still run this exact. Yeah, sort of that little Poison
00:29:26
pill. What's your view on the
00:29:27
antitrust sort of situation? And I mean, this is actually
00:29:31
based on very little, but we all sort of thought that Microsoft,
00:29:35
I don't know. Like, it's not, it's not
00:29:38
Facebook trying to buy them, right?
00:29:41
I mean, could you imagine that deal going through, even even if
00:29:45
they're not a gaming company? Technically, I just feel like,
00:29:48
Microsoft hasn't been under the same scrutiny, some of the
00:29:52
other, like, big Tech players, so it feels Feels like it has a
00:29:57
better chance that said I mean clearly they've made and
00:30:01
antitrust like huge on the agenda in Washington.
00:30:05
So and you know as discussed it wouldn't be obviously the same
00:30:10
Regulators looking into some of these harassment issues but they
00:30:15
know that Regulators are looking into the harassment issues.
00:30:18
I don't know if that comes into play somehow, who knows II.
00:30:22
Really feel like it could go either way.
00:30:24
I wouldn't be surprised either way.
00:30:26
I just want to make one random point.
00:30:28
I'm curious what you guys think this is the I have a podcast so
00:30:31
I can make this look like the. I've always thought that it's,
00:30:37
you know, like Apple and Google both control app stores, right?
00:30:41
All the Gaming revenue that flows through their systems,
00:30:46
they get 30%, but Microsoft has never been able to do this on
00:30:50
the PC. Obviously, bz was born in sort
00:30:52
of open, internet world and so steam is made of Fortune selling
00:30:57
like video games on the PC where Microsoft has never been able to
00:31:01
control the App Store. And so I do think there's an
00:31:04
interesting like so Microsoft then tries to build a steaming
00:31:09
streaming service, like sort of Netflix style, which would give
00:31:13
them sort of more control. And I almost like do feel bad
00:31:16
for Microsoft. It's like, you could be this
00:31:18
great gaming Monopoly on the PC, but you just were like born too
00:31:22
soon when it was, okay, to A rake and so you didn't get away
00:31:27
with it. But if you've been born today,
00:31:30
you'd be like, taking, basically all 30% of all revenue on
00:31:35
gaming. So can they just like accumulate
00:31:37
enough power that somehow they can like, figure out a way to do
00:31:41
it? I don't know, right?
00:31:43
I really don't know about that. I had it first.
00:31:49
It seems like they could. Um, I it's funny about
00:31:53
Microsoft, right? I always sort of feel like, They
00:31:56
don't get as much scrutiny as they should, right?
00:31:59
And they're so huge. Do you think that's like the
00:32:02
boringness of the company is a real?
00:32:04
Yeah, flak jacket for them, 100%.
00:32:08
I mean, they make Enterprise software and cloud computing
00:32:10
infrastructure, right? They have not platform Nazis and
00:32:14
they, you know, aren't apple and and because of that.
00:32:19
But you know, things like this will at least give them a little
00:32:21
bit more. Public-facing image size is also
00:32:24
kind of a nice guy. Which, you know seems to do well
00:32:28
for him but I don't know. I mean I think if you were to
00:32:31
ask most Americans who is the CEO of Microsoft, they would
00:32:36
think it was a wait. Yeah.
00:32:38
Yeah. You know, right?
00:32:39
Right. Which is funny for many reasons
00:32:42
but yeah, I mean, I don't want to go too much into the
00:32:46
Microsoft of it although you know, their argument that
00:32:48
they're going to build like a Netflix for games with
00:32:50
Activision just seems pretty far-fetched.
00:32:54
I mean it's not a great now that we've seen that Flexes earnings
00:32:56
like maybe you will actually yeah, exactly.
00:32:59
I mean if you're all into like, you know, destroying value
00:33:02
through all-you-can-eat models, you know, go look over, you
00:33:05
know, a few miles to the east in Hollywood from where
00:33:08
Activision's headquarters are to see like what that's done to all
00:33:11
those companies. So, best of luck to you
00:33:12
Microsoft, I mean they can afford it because they have a
00:33:15
extremely profitable Enterprise business.
00:33:17
And anyway, that's a that's that's that's for another day
00:33:22
for somebody who did not want to go into the, Microsoft of it
00:33:25
all. That was a really Good summation
00:33:26
of my cards. Yeah, I wanted to go back.
00:33:30
I mean, just to the Activision story, like we focused really,
00:33:34
and we always focus on like the corporate and, like, the money
00:33:38
and the deals. But like how, what's the like,
00:33:40
victim? Sort of the people who, like
00:33:42
suffered through the Activision culture, like, what's their
00:33:47
feeling at the moment, or like, have you been sort of catching
00:33:50
up with the most or your focus on Deal reporting at the moment?
00:33:54
Yeah, that's a really good question.
00:33:55
I think a lot of employees well, 19 percent really wanted Bobby
00:34:01
to resign, right? They felt like he should have
00:34:05
his walk of shame basically, and they didn't get that.
00:34:09
So, I think there is Disappointment about that for
00:34:13
sure, among the employee ranks, but I would say, most of what
00:34:18
I've heard is positive about Microsoft, right?
00:34:22
Because so, I will say, Activision has already been
00:34:27
cleaning house. Quite well since the summer they
00:34:30
have this woman Francis Townsend there who is leading the charge
00:34:36
about getting some of these Bad actors out.
00:34:38
But when they get to Microsoft eventually, I mean Microsoft can
00:34:42
just like do what it wants. Like this is one case where
00:34:47
layoffs might actually not be terrible, right?
00:34:51
They can, they can work even more on that workplace culture.
00:34:54
So I think think it's, you know, they didn't quite get the
00:34:57
outcome they wanted, but this isn't a terrible outcome either.
00:35:00
I don't think that's my two cents anyway.
00:35:04
I mean, it seemed like a big complaint or one of the
00:35:06
complaints in the Activision story.
00:35:07
Was that these Executives would get to leave with sort of a
00:35:11
positive. Yeah, goodbye.
00:35:13
And in some ways, Bobby kotick is also getting that because for
00:35:17
Microsoft to get it, over the hill, I'm sure they couldn't
00:35:21
Bobby wasn't going to be like, yeah.
00:35:22
And you can also like, shit on say, whatever they are.
00:35:27
Nice things about me. I know what Bobby is out there
00:35:29
saying and I know what their storyline is and all of this.
00:35:33
But I just know how hard it must have been for him to do this
00:35:37
deal and that is not the outcome.
00:35:40
He would have chosen even like a few months ago.
00:35:44
So I just feel like, you know, it's not the outcome.
00:35:49
These employees some of them necessarily wanted but I don't
00:35:52
also believe it's the outcome. He necessarily Ali wanted at
00:35:57
least in my opinion. So do you think there will be a
00:36:01
lot of turnover in the employee ranks especially because it
00:36:05
we've just been speaking about the people who wanted change at
00:36:08
the company who are upset with Bobby and wanted him to leave.
00:36:11
But there are probably as many if not more people at the
00:36:13
company, who liked the way that it was who like the way that it
00:36:16
ran, who did not see problems. So, will we see a lot of
00:36:21
turnover? Do you think people will stick
00:36:22
it out? Totally, I agree with you and
00:36:25
I'm glad You brought that up. Because for sure, there are
00:36:27
people that were happy there. I've spoken to many people who
00:36:32
especially within blizzard their unit loved working there.
00:36:37
Love the way it was run, they were already because of all
00:36:42
this, you know, these public problems.
00:36:44
Same like Facebook, right? They were already in these last
00:36:48
six months, having trouble, keeping talent and losing
00:36:51
people. They separately have this
00:36:53
unionization effort going on. On.
00:36:56
So I think that was already a problem, it might continue to be
00:37:01
a problem. It seems like it probably will
00:37:03
continue to be a problem, but it was definitely one they were
00:37:06
already facing. I think, how much did Activision
00:37:09
do to try to stop employees from talking to you guys?
00:37:13
I know with Facebook which you've also reported on they go
00:37:17
through cycles of intense leakage and then you know they
00:37:21
button things down a bit. I mean this there was so much
00:37:24
like legal action on the state's part I'm sure maybe freed people
00:37:27
up a little bit to talk in certain capacities but you know
00:37:31
what did you what sense did you get from people that were key
00:37:33
sources? Were those do you mean sorry?
00:37:35
Do you mean like getting sources to talk or what the company
00:37:39
tried to do to get us? Not what you think the company
00:37:41
mostly? I mean, how do they you know try
00:37:43
to put the fear of God into employees from ever speaking to
00:37:46
you guys? Yeah, we could talk another hour
00:37:51
about that but unfortunately some of that is probably Oh
00:37:55
Terry but they definitely. Yeah I would say the law is
00:38:00
courage. People from the fucking tough
00:38:15
to the journal, destroying our stock value.
00:38:19
I mean, this is a guy who you reported like, what threatened
00:38:22
to kill, allegedly, his assistant.
00:38:26
Over doing something read, read from that.
00:38:30
Yeah, I think you should just really that in.
00:38:33
Yeah, yeah. Which by the way, he's he told
00:38:38
us through spokeswoman that he deeply regrets.
00:38:41
So I will just put that's better soon.
00:38:43
So that's the one fact they didn't deny might be a message
00:38:47
eternally, do employees. So, I want to.
00:38:51
So you also worked with our friend Deepa on the Cambridge
00:38:55
analytic historiography. Aries.
00:38:56
And so, you spent some time in Facebook land, seeing all of
00:38:58
the, you know, issues that that company had through that whole
00:39:01
period. And Facebook is a company in
00:39:04
which through that hole and ongoing crises Mark, Zuckerberg
00:39:08
seems to have come out even stronger.
00:39:10
He was not forced to sell his company.
00:39:13
Its value has only increased substantially since that time.
00:39:16
What's your take on that? Why does one CEO become even
00:39:20
more of an emperor in the other one?
00:39:22
You know, has to walk away with only four hundred million
00:39:24
dollars. I I know this Mark Zuckerberg
00:39:29
question. I, I find myself even though I'm
00:39:31
not involved really in Facebook coverage anymore.
00:39:35
I just, I don't understand it. I really don't.
00:39:39
Um, I guess my speculation is that the thing that would really
00:39:44
force him to make a change? Is maybe the advertisers?
00:39:49
That's something we haven't really seen.
00:39:51
Yet is the money, you know, right.
00:39:53
People voting with the money. It just seems like they go in
00:39:58
waves of these scandals and then a few months later it's sort of
00:40:02
like did that even happen, you know.
00:40:04
It's crazy. I just never seen anything like
00:40:07
it. It's bizarre and even Cheryl is
00:40:11
still there, right? Right.
00:40:13
So right Mark has like the the structure of his shares.
00:40:18
I think protects him a lot, but Cheryl doesn't have that
00:40:20
protection, right? You did see a lot of people just
00:40:23
under her leave the So I was always I always wondered was it
00:40:29
because they felt like you know, having their former head of like
00:40:33
Global policy leave and other people like that that would
00:40:37
satisfy the board satisfied shareholder satisfy Regulators
00:40:40
or if it's just because those people are fed up and couldn't
00:40:42
just couldn't be there anymore. I did think that was interesting
00:40:45
that at that level. You saw the departures?
00:40:48
Yeah, I would just be so interested to about the board.
00:40:51
They're like, are they question of what I mean?
00:40:55
I just don't know. Oh, I really have.
00:40:57
It's just a fully outside of what you saw, you know, Mark
00:41:00
just put Tony the CEO of doordash on the board, which is,
00:41:06
I mean, I know Tony, he is a Founder first.
00:41:11
He definitely is someone who believes in like Founders
00:41:14
running out of these and so, you know, I like Tony, but you know,
00:41:18
if you're Mark Zuckerberg and you're looking for someone to
00:41:21
put on your board, who believes that a Founders should continue
00:41:24
to control the company. Tony shoe is a good pic.
00:41:28
So that was, that was a strong signal to me.
00:41:30
No, he, which isn't said that board member, right?
00:41:33
He's there for the beneficence of the shareholders.
00:41:38
I don't, and so is Drew Houston for that matter.
00:41:41
I mean, I always Drew also stored in Dropbox.
00:41:45
Yeah, yeah. Oh yeah, exactly.
00:41:47
Deep Silicon Valley, people believe in sort of the culture
00:41:52
of yeah. Who knew that we would look to
00:41:54
the gaming industry as like a pair of Agon of independent
00:41:56
coordinates. Well one of the really
00:41:59
interesting things is. I mean Activision had not faced
00:42:03
basically any scrutiny, really? Until that July lawsuit.
00:42:07
I mean, not not any serious scrutiny.
00:42:10
Were Facebook. I mean they've been weathering.
00:42:13
This kind of dad reporting for how many years now has it been?
00:42:18
I mean so long. They've got it down right?
00:42:22
They know how to handle right where Activision was having a
00:42:25
kind of Your it out as they went along.
00:42:28
Wait. Yeah.
00:42:29
I mean that's what it raises a question that we've asked on
00:42:31
this podcast before, I mean, and you're in an interesting
00:42:34
position, having written about tech not being a gamer yourself.
00:42:37
Like, Hollywood's a huge thing covered by the business press
00:42:41
Tex a big thing, gaming is now a huge industry and there are lots
00:42:46
of people that play them in. Are invested in them.
00:42:50
What's your answer for? Why like Activision wasn't sort
00:42:54
of a closely covered company. Before like what's what's going
00:42:57
on with the media? And we sort of elite culture
00:43:00
that we're not as like usually focused on the games business.
00:43:05
Yeah it's so funny. I actually asked this question
00:43:08
internally at one point and didn't really get a good answer
00:43:11
if you're like, I feel like sometimes the media just broadly
00:43:16
especially at like these big newspapers has like I don't want
00:43:21
to say gaps in coverage. I mean we certainly have a very
00:43:24
good like video. To report our, but it's not up
00:43:27
to her. What goes on the front page, or
00:43:30
what's covered a lot, right? So, I just don't know, it's
00:43:33
almost like there's coverage areas where it doesn't get
00:43:38
attention, until there's a scandal, and then it suddenly
00:43:41
like, oh wait a minute, like we should have been covering that
00:43:45
more or something like that and I feel like for some reason
00:43:48
video games, got into that category.
00:43:52
It does feel partially like generational to me.
00:43:54
I mean, it's yeah, Yeah, big Call of Duty hits are a
00:43:58
relatively new phenomenon so I don't know.
00:44:01
So it's like, it just feels like, yeah, the Masthead level
00:44:04
editors don't quite see how big some of these games are.
00:44:08
I don't, I mean, it's also just like how Hollywood I mean Tom
00:44:11
was Tom. You think it's about like just
00:44:14
like cultural impact and like video games?
00:44:16
No, I think I mean I yeah it's I still think this is going to go
00:44:20
way down like the video gaming around.
00:44:22
I'm sure. Kirsten doesn't want to stick
00:44:23
around for that. I do think games are derivative
00:44:27
of Hollywood culture and so, you know, it's easier for people to
00:44:30
identify with, you know, the the the more Upstream part of the
00:44:35
culture than the stuff that's a little bit more derivative
00:44:37
Downstream which isn't to say games or fully derivative.
00:44:40
It's just that, you know, you talk about what people are
00:44:42
interested in. As a broad topic, you know, the
00:44:47
movies and TV shows, we watch just happens to be more
00:44:49
interesting, definitely to editors, but I do Eric, you and
00:44:52
I have both been in a situation where we've gotten really you
00:44:54
were both you. More than me but Gamers and you
00:44:58
get into Esports and you recognize how big of a deal
00:45:00
sport is terrible story. So hard to write about.
00:45:03
I try to write about it so many times, it's not a great
00:45:06
business. I mean, that's part of the
00:45:07
problem. Everybody wants to take from the
00:45:09
enterprise software. Yes, James, yes.
00:45:12
Right there so much spin. Is it like just Esports exist as
00:45:15
marketing, is it like its own Revenue line?
00:45:17
Like Esports is just, it's like it's easy for them to sort of
00:45:21
shift around what it's even about and like, I don't know,
00:45:24
it's yeah. I think it's also like going
00:45:27
back to Bobby kotick slike be - or a - Celebrity Status whatever
00:45:32
we decided that was like there's not really a celebrity like who
00:45:38
are the celebrities and gaining, right?
00:45:40
Part of the reason we're all over Facebook is because Mark
00:45:43
Zuckerberg and like Sheryl Sandberg are just such
00:45:46
interesting. Like right.
00:45:47
You need a character is basically like Twitter.
00:45:51
I actually don't think anyone cares about Twitter except the
00:45:54
media but Jack Percy was like such a cool cover of Everything
00:45:59
I can and it was an awesome. Yeah.
00:46:03
And so I just think there hasn't been anyone like that in gaming
00:46:08
will also what happens frequently with gaming CEOs.
00:46:11
I actually don't know the status with Bobby, but a lot of them
00:46:14
are not Gamers and this is a real Pride attention in The
00:46:17
Gaming Community. When they'll bring up that,
00:46:18
like, oh the CEO of EA, not even a gamer.
00:46:21
And a lot of times they have to prove their, you know, gaming
00:46:24
Bona fides to like, Over an audience but it's yeah, I think,
00:46:28
you know, as we're talking what I think, also, the issue is that
00:46:31
Gamers, the people that do care about it, which is a huge number
00:46:33
of people are not necessarily Wall Street Journal readers and
00:46:37
your time writers they have their outlay right?
00:46:40
And they're not interested in the business or also
00:46:42
generational to. Yeah.
00:46:43
You think about the age of the people running newsrooms right
00:46:47
now? They they grew up at a time when
00:46:50
video games were basically Atari and Nintendo when it was still
00:46:55
considered kind of Even more Niche activity to do alongside
00:46:59
playing with dolls or playing with trucks.
00:47:01
And I think that as that generation of Newsroom leader
00:47:04
starts to phase out and younger people.
00:47:07
Come in, there will be a sort of a shift in attitude toward
00:47:10
whether or not gaming is an important part of like, yes of
00:47:15
the business ecosystem. Yes.
00:47:17
Well anyway, it was an incredible story, an incredible
00:47:19
feat of reporting and you know these stories have results.
00:47:23
So thank you. So, Much for having me.
00:47:26
You guys. Well, thank you.
00:47:27
Thanks a lot for joining, goodbye.
00:47:41
Goodbye. Goodbye, goodbye.
00:47:43
Goodbye. Goodbye.