US Department of Justice and Activision-Blizzard reach a settlement over an esports salary lawsuit

    
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It would apparently not be enough for Activision-Blizzard to treat its employees poorly; it also has been found to treat those who compete in its esports leagues poorly as well. The US Department of Justice filed a civil suit against the company yesterday over a rule in its Overwatch and Call of Duty esports leagues that kept player salaries intentionally depressed.

The rule in question is the Competitive Balance Tax, which required teams to stay within a spending threshold for players; any team found spending over that cap would face fines, which would then be distributed among the non-offending teams in their respective leagues. The rule works similarly to a luxury tax in traditional sporting leagues, though the lawsuit points out that those agreements were reached between their respective leagues and player unions, which neither of ActiBlizz’s esports leagues had.

According to the filing, this imposed tax “had the purpose and effect of limiting competition between the teams in each league for esports players and suppressed esports players’ wages,” while both leagues raked in millions of dollars for Activision-Blizzard from franchise fees, sponsorship revenues, streaming exclusivity deals, and television broadcast deals.

Lastly, the DOJ notes in its filing that this investigation has been going on for years, and Activision only ended the practice in 2021 when the company was warned that the rule was potentially illegal.

Both ActiBlizz and the DOJ have since agreed to a settlement in the matter (yes, the same day, suggesting it had been in the works for a while) for an undisclosed amount. The settlement still awaits approval from a federal judge at the time of this writing.

In spite of this latest legal slap, Activision still maintains its innocence in a statement, saying, “The tax was never levied, and the leagues voluntarily dropped it from our rules 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.” And while this case may be closed, it does illustrate how much scrutiny the company is under beacuse of its proposed merger with Microsoft.

Activision-Blizzard is considered a controversial gaming company owing to a long string of scandals over the last few years, including the Blitzchung boycott, mass layoffs, labor disputes, and executive pay fiasco. In 2021, the company was sued by California for fostering a work environment rife with sexual harassment and discrimination, the disastrous corporate response to which compounded Blizzard’s ongoing pipeline issues and the widespread perception that its online games are in decline. Multiple state and federal agencies are investigating the company as employees unionize and call for Bobby Kotick’s resignation. As of 2023, the company is being acquired by no less than Microsoft.
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