The Microsoft executive walked into the small, windowless room in Studio C at about 8 o’clock that evening. A half dozen staffers on the company’s “mixed reality” team were working late, tinkering with prototypes of virtual-reality headsets. When the boss arrived, an employee murmured, “I’ve got the thing working.”
The executive slipped on a pair of VR goggles and hit play. As the executive gazed into the VR headset, a nearby monitor — which mirrored everything on the headset’s display — flickered to life. Everyone in the room could see what the boss had chosen for his virtual-reality experience.
In the video that filled the screen, several young women in skimpy clothing frolicked on a bed; an overtly sexualized pillow fight ensued. An employee who was present, speaking with Insider later, described the scene as “VR porn.” The assembled staffers exchanged confused glances, and a couple of them walked out.
“It was in the office, in front of women,” the person recalled. “Incredibly uncomfortable.”
Perhaps most stunning, the executive wearing the headset was not some low-level manager gone rogue. He was Alex Kipman, one of Microsoft’s most powerful executives and the leader of its mixed-reality business. With his shoulder-length hair, leather jacket, and fluctuating degrees of stubble, Kipman looks as much like the frontman of a rock band as he does a tech executive.
In an earlier era, such a stunt might have passed with a smirk and an eye roll in the male-dominated tech industry. But all that was supposed to have changed at Microsoft. The incident with Kipman took place a few years after CEO Satya Nadella vowed to overhaul the company’s toxic culture and implement a respectful, diverse, and inclusive work environment. “Every one of us needs to do our best work, lead, and help drive cultural change,” Nadella wrote to employees the day he became CEO in 2014. “We sometimes underestimate what we each can do to make things happen and overestimate what others need to do to move us forward. We must change this.”
Yet interviews with dozens of current and former employees suggest the incident involving Kipman is part of a widespread pattern of executive misconduct — including verbal abuse and sexual harassment — that continues to persist at Microsoft. (The sources requested anonymity out of fear of retribution, but their identities are known to Insider.) Despite Nadella’s public stance against those he has called “talented jerks,” many inside the company say Microsoft retains a nearly unlimited tolerance for bad behavior by its top rainmakers and developers. Late last year, a group of employees contributed to a report detailing a litany of complaints against Kipman, according to two people familiar with the matter. Yet the dozens of allegations of misconduct resulted in no apparent consequences for Kipman, one of the people said.
A former executive who brought similar concerns to Nadella characterized his approach as: What’s something we can do to make it go away without making hard decisions? “He doesn’t like conflict,” the person said. Misconduct is “not something he wants to hear about,” said another executive who worked directly with Nadella. “If he does, he wants someone else to go fix it.”
Microsoft declined to confirm or deny the specific allegations against Kipman and other executives but said it was “unaware of any reports” about the VR incident. “Every reported claim we receive is investigated, and for every claim found substantiated there is clear action taken,” the company said in a statement to Insider. “This disciplinary action can range from termination, to demotion, loss of pay or bonus, official reprimand, mandatory training, coaching, or combination of some of these.”
Disrespectful and abusive workplaces have been a hallmark of the tech industry for decades. At Microsoft, sources say, the company’s “golden boys” have enjoyed impunity dating back to the reigns of Bill Gates and Steve Ballmer. “When they are golden, nothing can be done against them,” a former Microsoft executive told Insider. “The person believes they are untouchable and can do anything they want. You might as well swallow the abuse.”
Now, Nadella’s carefully crafted narrative about a kinder, gentler Microsoft is in danger of unraveling. In November, shareholders pressured the company to stop concealing workplace misconduct, voting overwhelmingly to require the tech titan to report on the effectiveness of sexual-harassment policies and the results of investigations into executives. “The gilding on the reputation of the culture change has worn off,” a woman who works directly with Nadella told Insider. “It’s actually quite tarnished.”
And in January, Microsoft sparked outrage among some employees when it announced it was acquiring Activision Blizzard, the scandal-ridden game developer being sued by the state of California over what the lawsuit describes as a “pervasive ‘frat boy’ workplace culture” that subjects female employees to sexual harassment and discrimination. In response to the announcement, one Microsoft employee called out Nadella on an internal message board for his “continuous silence” in the face of a yearslong effort by female employees to address sexual harassment and gender discrimination.
“We can’t even take care of our own house,” one Microsoft employee told Insider. “And now we just bought one in worse condition.”
The Gates of ‘hell’
In the era of Bill Gates, Microsoft’s cofounder and first CEO, the company had a reputation for rewarding the smartest person in the room — no matter how that person treated everyone else.
Gates built Microsoft into the world’s biggest software company, but the success came at a cost to employees who endured his meltdowns and browbeating. Gates’ Microsoft cofounder, Paul Allen, once described working for him as “being in hell.” Gates’ successor, Steve Ballmer, was also known to have an explosive temper. The culture established by leadership trickled down throughout the org chart, to the point where Microsoft’s different units were once depicted in a cartoon as warring gangs.
When Nadella took over in 2014, he said changing the company’s culture — a culture he knew well, having begun his career at Microsoft in 1992 — would be his top priority. Even his critics agree he has made some progress. He launched a performance-review program that rewards employee collaboration, hired a chief diversity officer, and tied bonuses to progress on diversity and inclusion. In May 2021, when Gates faced allegations of inappropriate behavior toward female Microsoft employees and ultimately acknowledged having an affair with a staffer, Nadella assured everyone that the company he runs is a new Microsoft. “The Microsoft of 2021 is very different from the Microsoft of 2000 to me and to everyone at Microsoft,” Nadella said.
But current and former employees say the public pronouncements and policy changes have failed to solve deeply entrenched problems at the company. In 2014, shortly after Nadella took over as CEO, he took the stage at a prominent conference for women in tech. In a conversation with Maria Klawe, then a Microsoft board member, Nadella said women should rely on “faith” in the system and “good karma” to get pay raises, rather than asking bosses for what they deserve. Klawe pushed back, to cheers from the audience, saying women should do their research and negotiate for raises.
Facing fierce backlash, Nadella apologized. As he later told the story in his book, “Hit Refresh,” the moment helped him “confront an unconscious bias that I didn’t know I had, and it helped me find a new sense of empathy for the great women in my life and at my company.”
But Klawe told Insider there was more to the story. After the conference, she said, Microsoft’s chairman at the time, John Thompson, blamed her for turning Nadella’s comments into a gaffe and asked her to resign from the board. “I felt like I was being silenced,” said Klawe, who stepped down the following year. “I was just disappointed Satya Nadella would let that happen.”
Nearly eight years later, Microsoft still feels that way for many women. According to the company’s own report on diversity, women make up just 25% of the company’s executive ranks. Last year, as previously reported by Insider, dozens of women at Microsoft used an internal email group to share stories of gender discrimination at work, calling on management to address pay and promotion gaps between men and women. “Right now, women are all paid equally until the women who aren’t prove it,” one employee wrote. A similar email chain focused on reports of sexual harassment and discrimination spread through the company in 2019.
Employees interviewed by Insider say that even the new policies Nadella has instituted to address these problems haven’t always worked as intended. The company now has a human-resources unit devoted to investigating gender-related issues. But some women say the investigations drag on for months or even years, with no clear timeline for resolution.
What’s more, some employees say Microsoft’s efforts to promote racial equity often smack of tokenism. One Black employee said she’d been interviewed for a dozen roles and felt as if the company was just going through the motions to satisfy a new policy requiring that all open searches include interviews with at least one “diverse” candidate. “I do a ton of interviews only to check a ‘minority’ box,” the employee said. “I waste a bunch of my time and everybody else’s time.”
The age of the ‘talented jerk’ lives on
Few of the “golden boys” at Microsoft were as infamous within the company as Terry Myerson, who was once hailed as “the most important man at Microsoft.” Myerson worked at the company for 21 years, rising to executive vice president in charge of major products such as Microsoft Windows and the Xbox system software. But employees told Insider that there was a dark side to his tenure. A person who worked directly for Myerson for years said he was known throughout his career for “abusing, berating, and belittling” employees. Another person who worked closely with Myerson described him as “bullying, extremely abusive, angry.”
Myerson enjoyed a protected status at the company for years, insiders said. But shortly before he left the company in early 2018, he “had a complete meltdown” backstage at a Microsoft event, according to a person who witnessed the incident. “He yelled at everyone and proceeded to berate them in a very public forum.”
It often takes an incident of that magnitude, with that kind of visibility, to get Nadella to act, employees told Insider. “If it’s something seriously egregious, he will address it,” said a woman who works directly with Nadella. “But it has to be something that puts him at risk.”
Not long after the backstage incident, Myerson left Microsoft to, as Nadella put it at the time, “pursue his next chapter.” A representative for Myerson declined to confirm or deny the allegations against him. She said he “doesn’t remember” berating employees at the event. “With 17K+ employees,” she added, “of course there will be a few disgruntled in the mix.”
The representative said that Myerson left the company on “great terms,” and noted that Microsoft later invested in his new company, Truveta. But three people with knowledge of the circumstances surrounding Myerson’s departure say that his behavior played a major role.
Another golden boy who one former executive says “cut people down to pieces” for years is Tom Keane, a 20-year veteran who served as corporate vice president of the company’s Azure cloud-computing business. “I’ve seen him reduce people to tears,” the former executive said.
Two insiders say Keane earned the nickname “King Tom” because employees were expected to be at his “beck and call” and obey him without question, or suffer his wrath. “People have to say the right thing and kiss the ring for King Tom,” one said.
The former executive who worked with Keane recalled an incident in which Keane stopped a meeting to publicly reprimand one of his staff members, making her cry. “It was so jarring,” the former executive said. “It almost didn’t matter who was in the meeting. He was simply berating this poor lady.” (Keane did not respond to a request for comment from Insider.)
Keane, the executive added, was protected at Microsoft because he was in charge of “one of the most vital levers of Azure’s growth” — customizing cloud products for specific industries. Keane was internally credited with winning a $10 billion contract from the Pentagon.
“Tom could say anything and do anything,” the executive said. “You only do things like this if an organization says, ‘That’s fine, you’re more important than anything else.'”
In January, following a 30-day hiatus — Microsoft would not specify the reasons for the leave — Keane was reassigned to a role on the company’s new special-projects team. He still oversees hundreds of employees, according to an internal organization chart viewed by Insider. Microsoft doesn’t reprimand “bullies,” a woman who works on Keane’s team told Insider. “They promote them.”
Microsoft’s point man in the metaverse
In January 2015, about a year after Nadella became CEO, Microsoft unveiled a sleek, futuristic-looking gadget that instantly rekindled the company’s fading cool factor. The HoloLens goggles let a user see an augmented reality — a view of the physical world intertwined with holographic images. The device’s inventor was Alex Kipman, a Microsoft veteran whose past hits included the motion-sensing Kinect controller for the Xbox gaming console.
Today, more than five years after the lewd VR incident in Studio C, Kipman remains near the top of the Microsoft org chart. He oversees a team that’s central to Nadella’s plan to define the next wave of computing in the metaverse — the catch-all term for technology that immerses users in lifelike digital worlds.
Current and former employees who have worked in Kipman’s actual world over the past decade say he has fostered a culture that diminishes women’s contributions and has engaged in inappropriate touching and comments. One former executive who worked with Kipman said they witnessed him behave inappropriately toward female colleagues more than once. In one instance, the former executive said, Kipman rubbed a woman employee’s shoulders while she “looked deeply uncomfortable.” The woman shrugged her shoulders, apparently trying to make him stop, but “he would firmly keep doing it,” the executive said. “Who is going to tell him to stop?”
Managers warned employees not to leave women alone around Kipman, according to three sources who say they received such warnings. In recent months, Kipman has appeared to have what two employees described as “chaperones” from human resources present with him at meetings.
Kipman did not respond to a request for comment from Insider, and Microsoft said the reports of him being chaperoned were “not true.” But last year, employees who say they’ve been subjected to inappropriate interactions with Kipman decided that enough was enough. More than 25 employees shared their experiences as part of the report that was compiled about Kipman, according to someone who contributed to it. It’s not clear whether Nadella saw the report, but the contributor was disappointed that Microsoft has allowed Kipman to remain in a high-profile position.
“This is not the kind of culture Satya talks about,” the person said. “Satya is giving Alex a platform to raise his ego and the work he’s doing. It makes it seem like he is getting success in spite of the toxicity he’s creating.”
The former executive who worked closely with Kipman said his behavior was curbed only by something even more toxic. “The best thing that happened, sadly, was the pandemic,” the executive said. “So we never had to interact with him in person.”
A blizzard is coming
After Microsoft shareholders voted in November to demand more openness about workplace abuse, the company hired a law firm to conduct an investigation of Microsoft’s handling of sexual harassment and gender discrimination claims. The company declined to answer questions from Insider about the status of the investigation. “Microsoft is deeply invested in all aspects of our culture and employee experience, which includes ensuring employees have clear opportunities to voice any concerns they have about workplace behavior,” the company said in a statement. “Microsoft’s leadership team has established a robust process for reporting and investigating every concern, and however employees choose to report them, we ensure they go through that thorough process.”
But the investigation did nothing to dampen the internal outrage over the company’s decision to acquire Activision Blizzard. In January, within hours of the announcement, Microsoft’s internal messaging boards lit up. Many employees were alarmed that Microsoft was joining forces with a company publicly described as having a frat-boy culture and facing widespread accusations of sexual harassment and discrimination. In March, Activision Blizzard agreed to pay $18 million to settle a federal investigation, though it still faces the lawsuit by California regulators. The company has asked a judge to dismiss that suit, which a representative says contains “distorted, and in many cases false, descriptions of Blizzard’s past.”
Activision Blizzard, the publisher of video game franchises including “Call of Duty” and “World of Warcraft,” represents an important plank in Microsoft’s quest to dominate what many believe will be the next big thing in tech. “We’re investing deeply in world-class content, community, and the cloud to usher in a new era of gaming,” Nadella said when the deal was announced. Activision Blizzard’s technology, he added, “will play a key role in the development of metaverse platforms.”
But some feel that Nadella hasn’t gone far enough to address internal concerns over the way Activision Blizzard’s culture might reflect on Microsoft. “I’m really disappointed that we didn’t hear from Satya what his plans are to make sure that the awful culture that has taken root in Activision Blizzard won’t fester and spread within Microsoft,” one employee wrote in an internal message-board comment viewed by Insider shortly after the deal was announced. “I personally would never entertain the idea of working for/with Blizzard or Activision for my own safety and welfare as a female engineer. I hope we hear concrete steps to make sure we aren’t introducing a dangerous and unwelcome culture.”
Microsoft initially said the longtime Activision boss Bobby Kotick would continue to serve as CEO. Kotick has come under scrutiny after he reportedly failed to report to the board that employees had been accused of sexual assault, including rape. But a recent Activision Blizzard filing revealed that Kotick’s employment at the company, after the acquisition, hadn’t been finalized.
Some at Microsoft are skeptical that removing Kotick would make much of a difference. One former executive said Microsoft liked to excuse its cultural issues by “blaming the boogeyman” — pinning responsibility for misconduct on past CEOs like Gates and Ballmer. But over the years, not much has changed. “A talented jerk always adapts,” another executive said. “A new CEO shows up and they just learn to play the same game in a different way.”
Company insiders say a culture of executive misconduct has remained constant and pervasive at Microsoft, from Gates to the present day. “From experience, I know that toxic culture at Microsoft doesn’t just disappear when a toxic person disappears,” one employee said. “Toxic culture spreads. It’s like cancer. Just because you cut it out doesn’t mean it won’t grow back.”
Ashley Stewart is a senior tech correspondent at Insider.