Activision Blizzard Settles Lawsuit With US Government Over Anticompetitive Esports Concerns

The US Department of Justice filed a civil antitrust lawsuit against the Call of Duty company, claiming Activision Blizzard made rules for Overwatch and Call of Duty esports leagues and players that were anticompetitive. The DOJ claims Activision Blizzard is violating the Sherman Act.

For its part, Activision Blizzard tells GameSpot that it does not believe it broke the law, and it appears the case has been settled on the same day it was filed. This was the second major lawsuit involving the US government involving Activision Blizzard pending currently, as Microsoft is being sued by the FTC over its planned purchase of the company.

The DOJ’s complaint claimed that Activision Blizzard used a “Competitive Balance Tax” in the Call of Duty League and the Overwatch League. The DOJ says this was an anticompetitive move that was put in place to penalize teams in each league when a player’s compensation passed a certain threshold.

Activision Blizzard tells GameSpot that it “carefully designed and implemented” the Competitive Balance Tax to help players “creative viable career opportunities” within the leagues. Activision Blizzard also maintains that it never asked anyone to pay the tax and pointed out that the tax was removed in 2021.

“We have always believed, and still believe, that the Competitive Balance Tax was lawful, and it did not have an adverse impact on player salaries. The tax was never levied, and the leagues voluntarily dropped it from our rules in 2021. We remain committed to a player ecosystem with fair pay and healthcare and continue to have the least restrictive player mobility compensation system across all of the major sports leagues,” Activision Blizzard said.

According to Bloomberg and Reuters, Activision Blizzard agreed to a settlement in the case. The lawsuit was filed today, April 3, and settled on the same day. The settlement must be approved by a federal judge, but if it goes through, it would require Activision to “refrain from putting any caps or limits on salaries of esports players or teams,” Reuters reported.

That’s not the end of Activision Blizzard’s trouble, though, as the DOJ’s Antitrust Division is asking the court to approve a “consent decree” that would block Activision Blizzard from implementing new rules that would directly or indirectly prevent players in Activision’s esports leagues from having their potential earnings limited by way of salary, tax, fines, or other means if a team exceeded a certain amount of compensation.

“The proposed consent decree with Activision would also require Activision to certify that it has ended all Competitive Balance Taxes in its professional esports leagues, to implement revised antitrust compliance and whistleblower protection policies, and to provide notice and an explanation of the final judgment to teams and players in its professional esports leagues,” the DOJ said.

This provisional consent decree will be published to the US Federal Register, and anyone has 60 days to submit comments about it. After this, the US District Court for Washington DC will submit a final ruling.

The DOJ said its actions against Activision Blizzard are part of a “broader focus” of the Antitrust Division to help improve labor market abuses.

“Video games and esports are among the most popular and fastest growing forms of entertainment in the world today, and professional esports players–like all workers–deserve the benefits of competition for their services. Activision’s conduct prevented that from happening,” DOJ Antitrust Division boss Jonathan Kanter said. “Today’s lawsuit makes clear that the Antitrust Division remains committed to protecting workers across all types of industries from anticompetitive conduct.”

You can read the full DOJ complaint against Activision Blizzard here.