Merging with troubled Activision will make Microsoft the third-largest gaming company by revenue, behind Tencent and Sony, it said, a major shift in the booming world of games.
"This acquisition will accelerate the growth in Microsoft's gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse," Microsoft said in a statement.
Activision, the California-based maker of "Candy Crush" has been hit by employee protests, departures, and a state lawsuit alleging it enabled toxic workplace conditions and sexual harassment against women.
Over the past seven months the company has received about 700 reports of employee concerns over sexual assault or harassment or other misconduct, in some cases separate reports about the same incident, The Wall Street Journal has reported.
Nearly 20 percent of Activision Blizzard's 9,500 employees have signed a petition calling for CEO Bobby Kotick to resign.
"Acquiring Activision will help jump start Microsoft's broader gaming endeavors and ultimately its move into the metaverse with gaming the first monetization piece of the metaverse in our opinion," Wedbush analysts said after the news broke.
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