The Questions Raised by California’s Dropped Sexual Harassment Suit Against Activision

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

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

As part of the settlement, however, Activision agreed to pay as much as $47 million to address accusations of pay disparity and discrimination. All female employees who worked at the company between 2015 to 2020 will be offered a kind of monetary relief; they will get paid based on a formula. The company maintains it has offered equitable pay.

It is a stunning reversal. In 2021, the state agency estimated that Activision’s liability was about $1 billion, according to The Wall Street Journal. How the state agency went from accusing Activision of fostering a culture in which female employees were “subjected to constant sexual harassment” to withdrawing those claims a couple of years later isn’t clear.

Was it enforcement zeal? This all started with an anonymous complaint in 2018. That letter was followed by a lawsuit from the Federal Equal Employment Opportunity Commission in 2021 and shortly later another from the California Civil Rights Department, which was then called the Department of Fair Employment Housing. The state agency objected to the settlement reached in the E.E.O.C. case. And then finally came a scathing Wall Street Journal story about accusations that the company didn’t handle sexual misconduct allegations properly.

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

The settlement leaves big questions unanswered. In a news release, the California Civil Rights Department declared victory, heralding the $54 million payout and stating that “California remains deeply committed to promoting and enforcing the civil rights of women in the workplace.” That the agency found no legal wrongdoing doesn’t mean it found no wrongdoing at all.

But the case utilized vast resources. The chief counsel at the agency was fired last year. And it all comes about a year after Microsoft, which presumably conducted its own due diligence, paid $69 billion to acquire the gaming company, whose shares took a hit after the allegations came to light.

Shipping companies pause travel through the Red Sea after missile attacks. Maersk and Hapag-Lloyd said they would stop their container vessels going through the Red Sea after an uptick in attacks since the start of the Israel-Hamas war. Maersk said one of its ships was targeted by a missile.

The Fed signals it will pivot on rates, and markets soar to near records. The central bank said it would cut interest rates three times next year, suggesting that a corner has been turned on efforts to deal with inflation. But critics say the Fed is sending mixed messages, and John Williams, president of the New York Fed, said yesterday that rate cuts were not yet being discussed.

COP28 ends with a deal to cut fossil fuels. The United Nations climate summit in Dubai ended with a nonbinding agreement calling on countries to transition away from fossil fuels. The pact followed weeks of rancorous debates, including over the event being hosted by a petrostate.

Epic Games’s court victory over Google this week was a big antitrust blow for the search giant. The Fortnite maker had accused Google of illegally throttling competition using its Google Play store, and a San Francisco jury agreed. Google plans to appeal, but the legal fight is just one of a number of cases it faces next year.

Nico Grant, a technology reporter for The Times, covers Google. He talked with DealBook about how the cases could reshape Google’s business.

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

Apple must be very happy it didn’t have to face a San Francisco jury! And that was the significant difference between the cases. A judge 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 does — partnerships that the jury found to be coercive and anticompetitive.

A judge will decide remedies in the Google Play case early next year. What potential changes could Google be ordered to make?

Google could be ordered to open up payment options in the Play Store, so that users can subscribe to apps directly with the developer that made them. The company could also be forced to open up the Android mobile operating system to a broader range of app stores. For instance, Epic would love 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.

Would Apple have to adopt similar changes?

In Apple’s Epic case, a judge ruled that the company has to allow users to pay app makers directly, rather than Apple processing the payments and taking a cut. But that hasn’t gone into effect as we’re waiting to see if the Supreme Court picks up the case next year. It’s possible that both companies — Apple and Google — will have to offer customers more options for how to pay for apps, even if so far, they’ve taken different routes to get there.

Google faces two other big antitrust cases in the United States — one related to its search business and the other to its dominance in digital advertising. Which of the three cases has potential to impact Google’s business most significantly?

The search case. It concerns Google’s largest business, responsible for more than half of its revenue last year. Closing arguments won’t take place until May and the judge has said he doesn’t have any idea how he’ll rule yet. But if Google is found to have run afoul of antitrust laws in search, there could be very serious consequences. The Justice Department could ask for one of the platforms where it distributes its search engine, such as its Chrome web browser or Android operating system, to be spun off from the company.

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

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

Netflix this week gave a peek into its black box, publishing viewing data for over 18,000 titles for the first half of the year. The streaming giant described it as a “big step” toward transparency, and despite its omissions — including whether viewers watched five minutes or an hour of an hourlong show — the release reveals more than what rivals like Disney have published.

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

  • Overall, Netflix originals accounted for 55 percent of hours viewed. The top-watched series: “The Night Agent,” with 812 million hours viewed, followed by Season 2 of “Ginny & Georgia” and the Korean series “The Glory.”

  • “Suits,” the USA Networks drama that became a global binge-watching phenomenon this year, accounted for 599 million hours across its nine seasons. (The show began running on Netflix in the summer, so the bulk of its views came after the report’s measured period.)

  • The top-watched productions didn’t have huge stars, who can significantly raise costs. The top-ranked star vehicle was “FUBAR,” starring Arnold Schwarzenegger, which came in 10th. Jennifer Lopez’s “The Mother” came in next at 14th.

  • That said, Netflix’s pricey partnerships with mega-producers are paying off. “Queen Charlotte: A Bridgerton Story,” from Shonda Rimes, ranked fourth with 503 million hours viewed.

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