Bobby Kotick Alleges Lawsuit Blocking Microsoft’s $67.8bn Activision Acquisition Was Intended to Aid Embracer’s California Expansion

Former Activision Blizzard CEO Bobby Kotick has claimed a 2022 lawsuit attempting to block Microsoft’s $67.8 billion acquisition of the company was filed to benefit Swedish conglomerate Embracer Group’s expansion in California, alleging a deliberate move to undermine Activision’s M&A strategy and talent growth, according to court documents and Kotick’s legal team.

In December 2022, ex-Activision Blizzard CEO Bobby Kotick responded in court to a lawsuit filed by Swedish pension fund Sjunde AP-Fonden (AP7) that aimed to halt Microsoft’s buyout of Activision. The lawsuit, submitted to Delaware’s Court of Chancery, alleged that the acquisition was rushed to sidestep investigations and looming sexual misconduct charges against Kotick. The sale, finalised for $67.8 billion, was one of the largest in video games industry history and drew scrutiny from regulators, shareholders, and affected employees.

Detailed Claims Linking Embracer to the Lawsuit

Kotick, in a sworn legal submission, stated: “This Delaware lawsuit was apparently aimed to help pave the way for Embracer to increase its foothold in the California market at the expense of Activision, making it more difficult for Activision to recruit talent and expand through M&A activity of the sort that Activision relied on to grow historically.”

According to Game File, which reported on the court proceedings, Kotick and his lawyers accused Embracer Group of acting as “a potential secret collaborator on the suit.” These claims suggest that the lawsuit’s underlying motivation went beyond shareholder or regulatory concerns, instead serving competitive interests within the global gaming sector by weakening Activision’s ability to secure new talent and acquisitions in its key Californian stronghold.

Embracer Group categorically rejected Kotick’s allegations, providing the following statement to Game File: “It is perhaps difficult to accept for Mr Kotick, but we did not and do not need any help from a Swedish pension fund in competing with Activision.” The company denied any link to the lawsuit or involvement in the California gaming market strategy described in the court filing.

Background and Context of the Lawsuit

The AP7 lawsuit was initiated in the wake of widespread media coverage and governmental investigations into Activision Blizzard throughout 2021 and 2022. Activision Blizzard faced multiple lawsuits for alleged sexual harassment, gender discrimination, and a so-called “frat boy” work culture. At the time, Kotick was under intense scrutiny, especially after a Wall Street Journal exposé raised questions about his knowledge and handling of historical allegations within the company.

AP7’s case asserted the Microsoft deal was expedited, citing the sexual misconduct crisis as a factor. The fund believed this haste disadvantaged shareholders and potentially masked deeper corporate culture issues tied to Kotick’s leadership. As per Game File, “AP7 believes the sale was allegedly rushed through in a bid to beat sexual misconduct charges levied at Kotick during his tenure as CEO.”

Kotick’s legal team firmly rejected this narrative, reiterating the focus on Embracer’s interests and downplaying the role of employee activism and public accountability in the sale’s timeline.

• Sale Price of Activision Blizzard: $67.8 billion (Microsoft acquisition, 2022)
• Key Litigant: Sjunde AP-Fonden (AP7), Sweden’s largest pension fund
• Lawsuit Filed: 2022, Delaware Court of Chancery
• Alleged Lawsuit Objective (Kotick’s claim): To help Embracer Group expand in California at Activision’s expense
• Embracer’s Response: “We did not and do not need any help from a Swedish pension fund in competing with Activision.”

This is not the first time Kotick has dismissed critical legal and employee actions. In 2023, he described ongoing litigation by government agencies relating to workplace harassment as “fake lawsuits”, claiming they were orchestrated by labour unions to artificially boost membership. He also called a petition signed by approximately 1,300 Activision Blizzard staff demanding his resignation “fake”, though he did not elaborate on specific inaccuracies.

Activision Blizzard’s public reputation was rocked in 2021 by detailed reports of entrenched workplace misconduct. The scandal placed Kotick at the centre of criticism, with sustained pressure from both employees and external watchdogs. Despite this, Kotick maintained that external legal and activist pressure did not undermine the validity or rationale of the Microsoft deal, at times suggesting alternative motivations and external actors were at play.

Kotick has previously claimed that Microsoft (Xbox) began pursuing acquisition talks during discussions over the potential sale of TikTok between 2019 and 2020 under US President Trump’s administration, indicating long-term strategic negotiations predated the public scandals.

Key facts:

• Date of Embracer’s alleged involvement: Lawsuit response filed December 2022
• Kotick’s main allegation: Lawsuit used as a tool for market advantage by Embracer
• Employee activism: ~1,300 signatures demanding Kotick’s departure deemed “fake” by Kotick
• Activision Blizzard legal backdrop: Multiple US agencies sued over workplace culture, 2021–2023

The legal dispute over Microsoft’s acquisition of Activision Blizzard highlights the high-stakes, multi-layered battles that have shaped control of the video games industry. The direct accusations linking industry players such as Embracer Group to tactical use of litigation underscore intense competition for talent and market position in California, one of gaming’s global epicentres.