How Microsoft's Activision Deal Ended in a $250M Payout

Microsoft has agreed to a $250 million USD settlement in a shareholder lawsuit tied to its acquisition of Activision Blizzard. The preliminary agreement was filed in Delaware’s Court of Chancery.

The lawsuit was filed in 2022 by Swedish pension fund Sjunde AP-Fonden (AP7). The fund claimed former Activision Blizzard CEO, Bobby Kotick, rushed the company’s sale to Microsoft to avoid fallout from workplace misconduct allegations surrounding the publisher. AP7 also argued shareholders were denied the chance to secure a higher price than Microsoft’s $95-per-share offer announced in January 2022.

The proposed settlement, which still requires court approval, states Microsoft will fund 40% of the payment directly, while directors’ and officers’ liability insurance will cover the remaining 60%. Shareholders who owned Activision Blizzard stock between the merger announcement and the October 2023 closing of the deal would receive about 30 cents per share.

Microsoft stated it entered the settlement “solely to avoid the burden, expense, and distraction of continued litigation.” The company also maintained that it does not substantiate allegations that Activision Blizzard leadership tolerated widespread workplace misconduct or acted improperly in handling complaints.

Activision Blizzard Lawsuit Revisited: 2021 Misconduct Allegations

The case became increasingly connected to allegations raised in California’s 2021 lawsuit against Activision Blizzard over discrimination and workplace harassment claims. That lawsuit was settled in December 2023 for approximately $54M.

In the latest settlement filing, AP7 acknowledged its original claims were based partly on media reports and allegations from the California Civil Rights Department that had never been validated by a court or independent investigation. The filing also cited language from the California consent decree stating no court or investigation substantiated claims of “systemic or widespread sexual harassment” at Activision Blizzard.

Kotick strongly denied AP7’s allegations throughout the proceedings.

Earlier in 2026, his legal team argued the lawsuit was effectively intended to benefit Swedish gaming company Embracer Group by weakening Activision Blizzard’s operations and recruitment efforts. Embracer rejected those claims and stated there was “no coordination or collaboration” with AP7.

Beyond Microsoft: The Broader Wave of Regulatory Scrutiny Hitting Big Tech Deals

This pattern of protracted regulatory and legal battles surrounding major tech acquisitions is not unique to Microsoft. Some notable recent parallels include the following:

• Adobe's failed $20B acquisition of Figma (2023): Adobe and Figma mutually agreed to terminate their merger after facing regulatory hurdles from the European Commission. The Commission argued the transaction would significantly reduce competition in the market for interactive product design tools, where Figma held a dominant position as the clear market leader.
• Amazon's abandoned $1.4B iRobot acquisition (2024): Amazon dropped its proposed acquisition of iRobot after the European Commission escalated the deal to a Phase 2 review. The Commission's statement of objections asserted that Amazon would have the ability and incentive to exclude iRobot's rivals by limiting their visibility and access to the Amazon marketplace.
• Dell's $1B shareholder settlement over the EMC acquisition: Dell agreed to a $1B class-action settlement after shareholders alleged they were short-changed billions of dollars when their Class V tracking stock was forcibly converted into Class C shares at what plaintiffs called an unfair price. The parties litigated for two and a half years before settling in the Delaware Court of Chancery.

Microsoft announced plans to acquire Activision Blizzard in January 2022 in a deal valued at $68.7B. The company positioned the acquisition as a major expansion of its gaming business across PC, console, mobile, and cloud platforms.

The acquisition officially closed in October 2023 after lengthy regulatory reviews in multiple markets, including scrutiny from the U.K.'s Competition and Markets Authority. The U.S. Federal Trade Commission sued to block the merger, but a federal judge ruled in Microsoft's favor, while the U.K.'s Competition and Markets Authority initially blocked it before approving a restructured deal. Microsoft ultimately sold Activision Blizzard's cloud streaming rights outside the European Economic Area to Ubisoft to secure regulatory approval.