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Activision Blizzard Settles DOJ Lawsuit Over Esports Salary Cap Allegations

  • Craig Miller
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  • April 14, 2023
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  • 2 minute read
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Activision Blizzard Settles DOJ Lawsuit Over Esports Salary Cap Allegations
Key Takeaways
  • Activision Blizzard has settled a DOJ lawsuit over allegations that it instituted an anti-competitive soft salary cap, known as the Competitive Balance Tax, for players in its Call of Duty and Overwatch esports leagues.
  • The settlement includes a proposed consent decree that, pending court approval, would prohibit Activision Blizzard from imposing any kind of tax or salary cap in the future.
  • The lawsuit and settlement underscore the importance of fair labor practices and ethical business conduct in the gaming industry, as well as the potential far-reaching consequences for the entire gaming community.
  • Activision Blizzard is currently in the process of being acquired by Microsoft in the largest gaming deal in history, and this settlement comes at a crucial time for the company.
  • The gaming publisher has faced numerous controversies in recent years, which serve as a reminder for companies to prioritize fair labor practices and maintain ethical business standards.

 

The US Department of Justice (DOJ) has sued Activision Blizzard over allegations that the company instituted an anti-competitive soft salary cap, known as the Competitive Balance Tax, for players in its Call of Duty and Overwatch esports leagues.

The lawsuit claimed that this tax limited competition for players and suppressed their wages. In response to the suit, Activision Blizzard has agreed to a settlement with the DOJ.

The Competitive Balance Tax aimed to prevent wealthier teams from monopolizing the best talent with high salaries.

However, according to the DOJ’s complaint, it ended up depressing wages for all players, as teams seeking to avoid the tax would have to pay other players on the team less.

Despite the publisher discontinuing the tax in 2021, the lawsuit alleges that its effects were still felt by players and the esports industry.

Terms of the Settlement

As part of the settlement, the DOJ’s antitrust division submitted a proposed consent decree to the US District Court for the District of Columbia.

Pending court approval, this decree would prohibit Activision Blizzard from imposing any kind of tax or salary cap in the future.

The settlement comes at a crucial time for the company, as it is currently in the process of being acquired by Microsoft in the largest gaming deal in history.

In a statement, an Activision Blizzard spokesperson maintained that the Competitive Balance Tax was lawful and did not have an adverse impact on player salaries.

They emphasized that the tax was never levied and the leagues voluntarily dropped it from their rules in 2021.

With video games and esports rapidly growing in popularity, the outcome of this lawsuit could have far-reaching consequences for the entire gaming community.

Broader Implications for the Gaming Industry

This lawsuit and settlement highlight the importance of fair labor practices and ethical business conduct in the gaming industry.

Activision Blizzard has faced numerous controversies in recent years, including accusations of widespread harassment and discrimination, as well as criticism for its handling of the Hong Kong protests and alleged denial of pay raises for employees at Raven Software due to unionization efforts.

With video games and esports rapidly growing in popularity, the outcome of this lawsuit could have far-reaching consequences for the entire gaming community.

As one of the largest gaming publishers in the world, Activision Blizzard’s actions and the resulting legal consequences serve as a reminder for companies to prioritize fair labor practices and maintain ethical business standards.

Craig Miller

Craig Miller

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