Former Activision CEO Bobby Kotick accuses Embracer of secretly organising a lawsuit against him and Microsoft

I’m going to keep this one as succinct as possible, because every word is causing me psychic damage. Former Activision CEO Bobby Kotick has alleged that an ongoing lawsuit accusing him of rushing Microsoft’s $69 billion acquisition of Activision Blizzard to avoid the fallout from company-wide sexual misconduct allegations was, in fact, secretly orchestrated by noted layoff manufacturer Embracer Group to boost sales of Embracer’s own games.

As reported by Game File, a Swedish pension fund called Sjunde AP-Fonden, aka AP7, filed the lawsuit in Delaware’s Court of Chancery in 2022. The suit names Microsoft, Activision Blizzard and the company’s former board of directors, including Kotick, as defendants. It claims that Kotick
“hastily negotiated a merger to protect himself, agreeing to sell Activision to Microsoft for $95 per share”, after being faced “with increasing pressures to leave Activision.”

Back in 2022, Activision Blizzard were weathering fresh allegations of sexual harassment in the workplace, having already been taken to court the previous year by the State of California on the charge of cultivating “a breeding ground for harassment and discrimination against women”. Activision-Blizzard ultimately settled the latter court case for $55 million in December 2023, shortly after the finalisation of the Microsoft Activision Blizzard buyout, with the State commenting that “no court or any independent investigation has substantiated any allegations [of] systemic or widespread sexual harassment at Activision Blizzard”.

Kotick himself has been accused of being aware of the harassment allegations, and failing to take appropriate action. In November 2021, Activision-Blizzard employees launched a petition calling for his removal. A group of shareholders also subsequently demanded his resignation. Kotick has denied any wrongdoing. In February last year, he also blasted the lawsuits as “fake”, arguing that they were orchestrated to drum up support for unions.

Which brings us back to this Swedish pension fund business. In October 2025, Chancellor Kathaleen McCormick of the Delaware Chancery Court said that shareholders in AP7’s proposed class action could pursue their “core” claim that Kotick and other Activision directors breached their fiduciary duties, while dismissing other claims against Microsoft. If you want to get into the weeds of it, here’s McCormick’s 83 page memorandum opinion submitted in January 2025.

In a recently filed ‘answer’ to the AP7 lawsuit, Kotick and his lawyers are claiming that the ulterior motive here is “to exert collateral harm on Activision” and to help Embracer, who are also headquartered in Sweden.

Kotick and his legal team claim that the suit “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 [merges and acquisitions] activity of the sort that Activision relied on to grow historically.”

Among Kotick’s justifications for this argument is that AP7’s view chairman Emma Ihre was an executive at Embracer at the time of the lawsuit’s filing. As such, he thinks the lawsuit was filed to mount a “collateral attack on Activision [that] also appears to be tied to Embracer’s desire to boost sales of its games while leaving Activision hamstrung in the development of its own games that competed against Embracer’s titles”.

Game File has obtained a response from Embracer, who are playing the whole thing for giggles. “We are humbled of Mr Kotick’s remark that we were competing with Activision on this level [sic],” an Embracer Group representative told the publication. “Nevertheless, 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.

“Thus, in short, there were no coordination or collaboration between Embracer and AP7 relating to any of Mr. Kotick’s statements,” the statement concludes. “No agenda or instructions were directed from Embracer via Emma Ihre or directly to AP7.”

At the time of the AP7 lawsuit’s filing, Embracer were attempting to cobble together a $2 billion funding deal with Savvy Games, a company funded by the Saudi Arabian government. The collapse of that deal would precipitate an enormous round of cuts, job losses, cancellations and closures over the following few years. I wouldn’t put it past Embracer to ‘do a Peter Thiel’ on Kotick and Activision, but it seems like they had plenty other fish to fry.