The Call of Duty series of video games ranks among the most popular franchises in gaming history. Controlling the actions of your character in the first-person shooter is relatively straightforward. It’s what’s going on beyond the game that requires an instruction manual several inches thick.
The purchase of game distributor Activision Blizzard Inc. by Microsoft Corporation was finalized in October 2023, but a lawsuit from Swedish pension fund Sjunde AP-Fonden filed in November 2023 aimed to hit the restart button through a Delaware judge. Claiming that Chief Executive Officer Bobby Kotick and handpicked directors at Activision had placed their own best interests before those of the stockholders during the acquisition of Activision Blizzard, the plaintiff’s claims include breach of fiduciary duties, violations of Delaware General Corporation Law (DGCL), and illegal payment of dividends on treasury shares. Microsoft was also named as a defendant for aiding and abetting a deal conducted in bad faith.
It asserts that the deal for the game studios was rushed through at a below-market cost to protect Kotick’s job and financial rewards from the merger in the face of sexual harassment and discrimination allegations in the Activision Blizzard workplace. Ultimately, Activision reached a $54 million settlement with the California Civil Rights Department over those allegations, and the CRD withdrew all of its claims. No subsequent independent investigation or claims revealed sexual harassment or discrimination at Activision, but the initial lawsuit received widespread media coverage at the time.
Is It Christmas Near You? I Ask Because I Keep Lighting You Up.
The first Call of Duty game came out in 2003 to instant acclaim and massive sales. 2004 saw the release of the massively multiplayer online role-playing game World of Warcraft, which has a subscription model and has pulled in over $9 billion in revenue.
The first-person shooter COD, set during World War II, would spawn 21 sequels so far and become a staple of online gaming and competitive esports through Sony’s PlayStation, Microsoft’s Xbox, and personal computers. The franchise has sold over 500 million copies and boasts over 100 million active monthly online players, making Activision Blizzard one of the true giants of the gaming industry. Activision Blizzard outsources the creation of each new version to other game makers.
The Deal With Microsoft
When Microsoft approached Kotick in November 2021 to express its interest in acquiring the gaming company, the lawsuit alleges his position was a bit shaky. Activision’s stock had plunged in the wake of the news coverage regarding the sexual harassment and discrimination claims against the company. The new lawsuit by Sjunde AP-Fonden alleges that Kotick assembled a group of directors loyal to him and offered a takeover price in a purchase range that was an average of $23 per share lower than the range the Activision board of directors had foreseen based on predictions of Activision’s future performance. It also claims he delayed or omitted responses to other potential buyers. Activision’s performance did quickly recover, with stock prices continually rising over the last five years and all previous lawsuits against the company resolved in the CRD settlement.
Both the Federal Trade Commission (FTC) and the United Kingdom’s Competition and Markets Authority (CMA) launched antitrust investigations over Microsoft’s Activision deal to determine whether it would create an unfair competitive advantage in the video game industry. The suit charges that Kotick continued to push the merger through, calling for stockholder votes that lacked full disclosure. With Kotick’s proceeds for the sale estimated to be in the $400 million range, Sjunde AP-Fonden accused him and the other involved directors of multiple offenses, including a breach of their fiduciary duties to the Activision Blizzard stockholders.
Maybe a Flowchart Would Help
While Call of Duty will keep track of a player’s combat totals during the game, Delaware Chancellor Kathaleen McCormick’s ruling on October 2, 2025, might require a scorecard of its own to keep track of which counts are proceeding, which were dismissed, and which became something else. For now, Microsoft is off the hook, while Activision Blizzard saw the dismissal of some, but not all, of the allegations. Sjunde AP-Fonden is determined to see the mission through to the end of their legal challenge.
Chancellor McCormick dismissed the claims against Microsoft, stating that the plaintiffs failed to prove that the company knew Kotick was engaging in a breach of fiduciary duties. Was it a great deal for them? Absolutely. Did they know the extent of what Kotick was up to? Maybe, but without proof from the plaintiffs, it was nothing more than speculation, the court held.
However, Kotick didn’t fare as well. Most claims by Sjunde AP-Fonden were allowed to continue, including breach of fiduciary duties. The court ruled that there was a reasonable belief that Kotick operated in bad faith while masterminding the sale. The motion for dismissal was amended to one for summary judgment, which means both sides will continue to argue their respective stances at a later date. We’re still a long way from a trial, however.
The Federal Trade Commission (FTC) withdrew its own litigation against Microsoft in May 2025, and a previous consumer class action settlement was reached in 2024. Litigation over the merger, which closed in 2023, appears to be wrapping up, at least for Microsoft. They can now fully enjoy the rising stock price of Activision and keep churning out those Call of Duty games.
Related Resources
- How To Merge Two Companies (FindLaw’s Starting a Business)
- What Is Antitrust Law and Trade Regulation? (FindLaw’s Learn About the Law)
- Breach of Fiduciary Duty (FindLaw’s Business Laws and Regulations)
