The questions raised by the dropped sexual harassment lawsuit against Activision in California

On Friday, the California state agency, which accused video game maker Activision Blizzard of promoting a culture of sexual harassment against women, withdrew those allegations in a $54 million settlement with the company.

The California Civil Rights Department ruled that “no court or independent investigation has substantiated any allegations” of “systemic or widespread sexual harassment at Activision Blizzard.”

However, as part of the settlement, Activision agreed to pay as much as $47 million to address allegations of pay inequality and discrimination. All female employees who worked at the company between 2015 and 2020 are being offered some kind of financial relief; they are paid based on a formula. The company claims it offered fair wages.

It’s a stunning turnaround. In 2021, the state agency estimated that Activision’s liability was approx $1 billion, according to The Wall Street Journal. How the state agency accused Activision of fostering a culture in which female employees were “subjected to constant sexual harassment” went from retracting these claims a few years later is unclear.

Was it enforcement zeal? This all started with one anonymous complaint in 2018. That letter was followed by a lawsuit from the Federal Equal Employment Opportunity Commission in 2021 and shortly later another lawsuit from the California Civil Rights Department, then called the Department of Fair Employment Housing. The state agency has appealed the settlement reached in the EEOC case. And then one finally came damning Wall Street Journal story about allegations that the company failed to properly handle allegations of sexual misconduct.

The journalist Matt Taibbi wrote about this research: “Business regulation often starts with an investigation and ends with a devastating headline, but California has flipped the script.”

The settlement leaves big questions unanswered. In a press release, the California Civil Rights Department declared victory, heralding the $54 million payout and stating that “California remains deeply committed to advancing and upholding the civil rights of women in the workplace.” The fact that the agency found no legal misconduct does not mean that no misconduct was found at all.

But the case used enormous resources. The agency’s chief attorney had been fired last year. And it all comes about a year after Microsoft, which is believed to have conducted its own due diligence, paid $69 billion to acquire the gaming company, whose shares took a hit after the allegations came to light.

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Google’s antitrust gauntlet

Epic Games’ victory over Google this week was a major antitrust blow for the search giant. The Fortnite maker had accused Google of illegally restricting competition through its Google Play Store, and a San Francisco jury agreed. Google plans to appeal, but the legal battle is just one of many issues Google will face next year.

Nico Grant, a technology reporter for The Times, covers Google. He spoke to DealBook about how these issues could reshape Google’s business.

Apple largely won a case similar to the one Google just lost, which was also brought to you by Epic. What explains the different outcomes?

Apple must be very happy it didn’t have to stand in front of a San Francisco jury! And that was the significant difference between the cases. A judge has ruled in the Apple case.

It’s also notable that Apple has a closed system in which it makes its own phones and software, so it doesn’t have the complicated relationships with other phone makers that Google has: partnerships that the jury found are coercive and anti-competitive.

A judge will decide on the remedies in the Google Play case early next year. What possible changes should Google make?

Google could be ordered to open up payment options on the Play Store, allowing users to subscribe to apps directly from the developer who created them. The company could also be forced to open up the Android mobile operating system to a wider range of app stores. Epic, for example, would like to offer an app store to Android users.

In these scenarios, the company’s Play Store business could be much less profitable because Google would collect fewer fees.

Should Apple make similar changes?

In Apple’s Epic case, a judge ruled that the company must allow users to pay app makers directly, rather than having Apple process the payments and get a cut. But that’s not in effect yet as we wait to see if the Supreme Court will hear the case next year. It’s possible that both companies – Apple and Google – will need to offer customers more options for paying for apps, even if they’ve taken different routes to get there so far.

Googling is facing two other major antitrust cases in the United States — one related to its search activities and the other to its dominance in digital advertising. Which of the three cases will have the greatest impact on Google’s business?

The search case. This is Google’s largest company, responsible for more than half of its turnover last year. Closing arguments won’t take place until May and the judge has said he has no idea yet how he will rule. But if Google’s search is found to be in violation of antitrust laws, the consequences could be very serious. The Justice Department could ask for one of the platforms on which it distributes its search engine, such as the Chrome web browser or the Android operating system, to be spun off from the company.

Is the outcome in the Google Play case likely to influence rulings in other antitrust cases facing Google in the United States or in the European Union?

A legal expert I spoke with said the cases are so different that this result is not necessarily representative. But it shows that Google is not invincible. And it will certainly motivate anti-Google advocates on both sides of the Atlantic to push harder to replicate the result.

What made a Netflix hit?

Netflix gave a glimpse into its black box this week, publish viewing data for more than 18,000 titles in the first half of the year. The streaming giant described it as a “big step” towards transparency, and despite that his omissions – including whether viewers watched an hour-long or five-minute show – the release reveals more than what rivals like Disney have published.

Here are some of the most interesting statistics to come from the report, which covers 93.5 billion hours (or 10.7 million years):

• Overall, Netflix originals accounted for 55 percent of hours watched. The most watched series: ‘The Night Agent’, with 812 million viewing hours, followed by season 2 of ‘Ginny & Georgia’ and the Korean series ‘The Glory’.

• “Suits,” the USA Networks drama that became a global binge-watch phenomenon this year, racked up 599 million hours over nine seasons. (The show started on Netflix in the summer, so the bulk of views came after the report’s measured time period.)

• The most watched productions did not have major stars, which can significantly increase costs. The highest-ranked star vehicle was “FUBAR,” starring Arnold Schwarzenegger, which finished in 10th place. Jennifer Lopez’s “The Mother” came in next at 14th.

• That said, Netflix’s expensive partnerships with mega-producers are paying off. “Queen Charlotte: A Bridgerton Story,” by Shonda Rimes, was in fourth place with 503 million hours watched.

Thank you for reading! We’ll see you Monday.

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