The state lawsuit against Activision Blizzard and the controversy it set off has now claimed an executive sacrifice.
On Tuesday, August 3, Activision Blizzard’s chief operating officer, Daniel Alegre, announced that the president of the Blizzard Entertainment studio will be leaving his post.
Blizzard Entertainment is responsible for “Call of Duty,” “World of Warcraft,” and “Candy Crush,” among other computer games that have become cultural touchstones.
On July 20, after two years of investigation, California’s Department of Fair Employment and Housing filed a lawsuit against the parent company, Activision Blizzard, alleging inappropriate behavior toward women as a broad pattern of a fratboy, workplace culture.
Activision Blizzard’s Response Disappoints
The suit, the broadening scandal, and the underlying gender bias: they are all important not because Activism Blizzard is unique in the industry but precisely because it isn’t. CNN says that the crisis “echoes similar controversies at other major tech firms,” especially in the gaming industry.
The company’s initial response was that the allegations of the state’s complaint were “distorted, and in many cases false.”
Many company employees found that reaction itself disturbingly cavalier. By July 26, hundreds of employees had signed an open letter saying that the company’s reaction to the state’s lawsuit was of a piece with “a company atmosphere that disbelieves victims.” They expressed concern that there is no “safe environment for victims to come forward in the future.”
After that employees’ letter became public, the executives did begin to change their public stance. On July 27, the CEO, Bobby Kotick, apologized for what he was now calling the company’s “tone deaf” initial response. Kotick also promised “swift action” and “long-lasting change,” which would begin with a review of the company’s policies and procedures by an outside law firm. Kotick declared that he wants to “promote a respectful and inclusive workplace.”
The law firm that Kotick hired to perform that review was WilmerHale. WilmerHale is known as the go-to law firm for management to hire when union busting is called for. The workers at Activision Blizzard are not unionized, but the choice of WilmerHale to do the review of workplace policies seems, at best, a continuation of the tone deafness.
A Firing and a Lawsuit
The fallout continues and, as noted on August 3, the company announced that J. Allen Brack, president of the Blizzard Entertainment studio (and one of the officials specifically named in the state’s complaint) is on his way out the door.
Nobody has specified any good reason why Brack is the one who must be sacrificed. Nonetheless, Brack will reportedly be replaced by Jen Oneal and Mike Ybarra as a team. Brack said, “I am confident that [Oneal and Ybarra] will provide the leadership Blizzard needs to realize its full potential and will accelerate the pace of change.”
Also on August 3, a shareholder, Gary Cheng, filed a lawsuit against the company. This may in time be elevated into a class action lawsuit, if the U.S. district court for the central district of California certifies Cheng as the representative of a class.
The lawsuit claims that over a period of years the company has heard from actual and potential shareholders the existence of a “pervasive culture of harassment, discrimination, and retaliation [for complaints]” and has hid the risk that this culture “would result in serious impairments to Activision Blizzard’s operations.”
The theory of the lawsuit is that this pattern of deception inflated the price, that Cheng and others of the same alleged class bought the stock at the inflated level, and accordingly have suffered losses as the truth has come out and the price has fallen.