Activision Blizzard is facing a lawsuit accusing it of monopolizing the market Call of Duty leagues and tournaments.
Professional gamers Hector “H3cz” Rodriguez and Seth “Scump” Abner allege in a lawsuit filed Thursday in California federal court that the gaming giant violated antitrust laws by preventing “competitors from entering the market” and coercing players and teams. owners agree to “extort financial terms”. They point to restrictions on the ability to obtain compensation from sources other than Activision through endorsements or streaming, as well as mergers aimed at strengthening the company’s alleged monopoly power.
In a statement, a spokesperson for the company said the plaintiffs are “demanding that Activision pay them tens of millions of dollars to avoid this frivolous litigation, and if their demands are not met, they will file suit.”
According to the complaint, for the market Call of Duty leagues and tournaments were competitive until 2019, with multiple entities—including Activision, GameStop, and Major League Gaming—hosting events. They mostly had modest entry fees, which ensured that the best players and teams could participate, the suit says.
But that year, players say, title-winning Activision began requiring top players and teams to agree to “rent-seeking requirements and various restrictive covenant terms” that allegedly violated the Sherman Act, an antitrust law. other things prevent unlawful restraint of trade. Abner says that he was forced to sign the contract during the photoshoot “despite asking for a consultant, without enough time to review it, and under threat of being kicked out of the Activision CoD League because he didn’t immediately agree to its terms.”
According to the lawsuit, teams must pay a $27.5 million entry fee to compete in the tournaments, give Activision half of their revenue from ticket sales and sponsorships, and give the gaming giant exclusive rights to contract with top-grossing sponsors such as Monster Beverage. Mountain Dew and USAA Insurance and broadcasters.
Activision’s league is modeled after traditional sports leagues such as the National Basketball Association, the suit says. But unlike those leagues, the company did not have a collective bargaining agreement with players and team owners.
While players in other professional sports leagues have agreed to salary caps as a result of bargaining, esports players are not members of a union and have never negotiated the rules. According to legal experts, antitrust laws contain exceptions to contracts that limit players’ salaries and rights if they are reached through the collective bargaining process.
The suit also takes issue with Activision’s 2016 purchase of Major League Gaming Corporation, then the leading organizer of professional Call of Duty tournaments. This acquisition was not subject to pre-merger notification requirements and was subject to Federal Trade Commission oversight.
The players claim that Activision has refused to grant licenses to the organizers and operators of other competitions because it owns the game’s copyright.
“Thus, if a team of professional Call of Duty players were to continue competing in professional Call of Duty leagues and tournaments – this is important to preserve the ability of players and teams to secure sponsorships and other ‘off-the-field’ income. opportunities – their only option was to do so in the Activision CoD League under the terms dictated by Activision,” the plaintiffs’ attorney, Eric Rosen, wrote in the complaint.
The players allege unfair competition and violations of various antitrust laws. They are seeking at least $100 million and an injunction prohibiting the anti-competitive conduct.
Activision did not immediately respond to a request for comment. In October, Microsoft struck a $69 billion deal to buy the company after defeating a Federal Trade Commission lawsuit. The merger is believed to further strengthen the firm’s position as a gaming giant.
Last year, Activision settled a lawsuit by the Department of Justice accusing the company of imposing rules that illegally hindered competition and suppressed wages for players in two esports leagues. The agency cited a complaint about the competitive balance tax in Activision Call of Duty and Overwatch leagues. The rule that the leagues’ independent teams must follow imposes a tax on teams if their total salaries for players exceed a certain threshold.
Under the agreement, Activision was prohibited from creating any rules that would in any way limit player salaries or penalize a team for exceeding the salary cap for players.