Video game company Activision Blizzard is in hot water again. This time, it’s over allegations they monopolized tournaments for “Call of Duty.” There is now a pending lawsuit from professional gamers Hector “H3cz” Rodriguez and Seth “Scump” Abnert to the tune of $100 million.
The pair filed the suit with the California federal court.
The document alleges Activision violates antitrust laws by preventing “would-be competitors from entering the market.” This, along with supposedly coercing players and team owners to agree to “extortionate financial terms.” The restrictions imposed by the company allegedly hindered players ability to earn revenue from any source aside from Activision. They also contend that the company participated in mergers purely to cement its monopoly on the industry.
Activision says Rodriguez and Abner demanded “Activision pay them tens of millions of dollars to avoid this meritless litigation, and when their demands were not met, they filed,” according to a statement made by a company spokesperson.
The lawsuit says that until 2019, the market for ”Call of Duty” leagues and tournaments was competitive. Activision as well as places like GameStop and Major League Gaming all hosted their own events with reasonable entry fees. These lower barriers to entry helped to ensure that the best players/teams could participate.
The suit also alleges Activision started to demand top players and teams to agree to “rent-seeking demands and various trade-restraining contractual provisions.” If that is true, it is a violation of the antitrust Sherman Act, which bars illegal restraints of trade. Abner claims that while participating in a photoshoot, he was pressured into signing a contract “without adequate time to review, despite requesting counsel, and under threat of being excluded from the Activision CoD League absent immediate acquiescence to its terms.”
The suit claims Activision demands teams pay an astounding $27.5 million entry fee to compete in tournaments. On top of that, they must give the company half of any revenue from ticket sales and sponsorships. Activision also supposedly retains exclusive rights to contract with some of the most lucrative sponsors, like Monster Beverage and Mountain Dew.
Esports vs. Traditional Sports
The suit uses traditional sports leagues, like the National Basketball Association, to explain how these leagues are structured. The issue is this design allegedly leaves out the collective bargaining agreement most of these professional sports have between players and owners. This means esports players are not a part of any kind of union and lack the collective bargaining power to negotiate these rules.
Rodriguez and Abner also point out that Activision acquiring Major League Gaming Corporation in 2016 helped set the stage for these issues. Since MLG was the top organizer of professional “Call of Duty” tournaments at the time. The purchase of MLG was not subject to pre-merger notification requirements and was subject to oversight by the Federal Trade Commission. Around this same time, they say Activision began to refuse to grant licenses to organizers/operators of other competitions. Effectively leaving the company and its subsidiaries as the only game in town for “Call of Duty” competitions.
“Thus, if a team of professional Call of Duty players wanted to continue to compete in professional Call of Duty leagues and tournaments—which is essential to the players’ and teams’ maintaining their ability to secure sponsorships and other “off-field” revenue opportunities—their only choice was to do so in the Activision CoD League on terms dictated by Activision,” writes Eric Rosen, a lawyer for the plaintiffs.
This lawsuit is seeking $100 million and a court order prohibiting further anticompetitive conduct. On the grounds of unfair competition and violations of several antitrust laws.
Previous Activision Lawsuit
It’s important to note that last year the now Microsoft-owned Activision settled another suit by the Department of Justice. That suit accused the company of imposing rules that illegally stilted competition for players in two of its esports leagues and suppressed wages. The DOJ took issue with the competitive balance tax in Activision’s “Call of Duty” and “Overwatch” leagues. This rule is mandatory for the leagues’ independently-owned teams and imposes a tax on teams if their total salaries for players exceed a certain amount. This settlement barred Activision from establishing any rule that would restrict wages for players. Or any attempt to penalize a team for going over the salary cap for players.
We’ll keep you posted on updates about this case as they become available. You can read the full filing here.
