Activision Blizzard Faces Lawsuit Alleging Monopolization of Call of Duty Leagues and Tournaments

Activision Blizzard Faces Monopoly Lawsuit Over Call of Duty Leagues

In a recent lawsuit filed against Activision Blizzard, the gaming giant is accused of monopolizing the market for Call of Duty leagues and tournaments. Professional gamers Hector “H3cz” Rodriguez and Seth “Scump” Abner claim that the company violates antitrust laws by preventing potential competitors from entering the market. They further allege that Activision Blizzard coerces players and team owners into accepting unfavorable financial terms.

Unfair Restrictions and Control Over Compensation

The lawsuit highlights Activision Blizzard’s restrictions on players’ ability to earn compensation from sources other than the company itself. This includes limitations on endorsements or streaming. The plaintiffs also point to mergers undertaken by Activision Blizzard to consolidate its alleged monopoly power in the market for Call of Duty leagues and tournaments.

Responding to the allegations, a spokesperson from Activision Blizzard stated that the plaintiffs had demanded significant financial compensation to avoid litigation and resorted to legal action when their demands were not met.

A Competitive Market Until 2019

According to the lawsuit, the market for Call of Duty leagues and tournaments was competitive until 2019, with various entities hosting events, including Activision Blizzard, GameStop, and Major League Gaming. The entry fees for these events were relatively modest, allowing the best players and teams to comfortably participate.

Imposition of Aggressive Demands by Activision Blizzard

The lawsuit states that in 2019, Activision Blizzard, as the game’s developer and publisher, introduced demanding conditions for top players and teams. These conditions were alleged to violate the Sherman Act, an antitrust law that prohibits restraints of trade. One of the plaintiffs, Seth Abner, claims to have been coerced into signing a contract during a photoshoot with inadequate time for review and threatened with exclusion from the league.

Teams competing in tournaments now face a $27.5 million entry fee, with requirements to share half of their ticket sales and sponsorship revenue with Activision Blizzard. Additionally, the gaming giant secures the exclusive right to contract with highly lucrative sponsors and broadcasters.

Lack of Collective Bargaining Agreement and Copyright Control

Unlike traditional sports leagues that have collective bargaining agreements, esports players, including those participating in Activision Blizzard’s leagues, do not have similar arrangements. This lack of negotiation power enables Activision Blizzard to wield significant control over the players’ earning potential.

The lawsuit also raises concerns about Activision Blizzard’s acquisition of Major League Gaming Corporation in 2016. It claims that the acquisition, which strengthened Activision Blizzard’s hold on the market, bypassed the oversight of the Federal Trade Commission.

Moreover, Activision Blizzard’s copyright ownership of the game grants the company exclusive control over granting licenses for third-party competitions.

Legal Claims and Seeking Remedies

The lawsuit, filed for unfair competition and violations of antitrust laws, seeks a minimum of $100 million in damages, along with a court order to prevent further anticompetitive behavior from Activision Blizzard.

Activision Blizzard is yet to respond to the lawsuit, and its acquisition by Microsoft, completed last year, is expected to strengthen its leading position in the gaming industry.

Notably, Activision Blizzard settled a lawsuit brought by the Department of Justice last year, which accused the company of imposing rules that stifled competition and limited player salaries in two of its esports leagues. The settlement prohibits Activision Blizzard from implementing any rules that restrict player wages or penalize teams for exceeding set salary caps.

Read the Full Lawsuit Below: