Activision Blizzard settles DOJ lawsuit over eSports wage suppression

The company allegedly deployed a salary cap for independently owned teams.

USA Today Sports / reuters

The US Department of Justice has settled a lawsuit it filed Monday with Activision Blizzard over suppressed eSports wages, according to Reuters. The case, submitted in the US District Court for the District of Columbia, focuses on a rule that required independently owned teams to effectively pay double if they passed a soft salary cap. A federal judge will still need to approve the settlement.

The complaint, the fruit of an investigation first reported in 2021, said that in Activision’s Overwatch and Call of Duty leagues, the “competitive balance tax” was structured to penalize teams if their compensation exceeded a threshold set by Activision. “While players in other professional sports leagues have agreed to salary restrictions as part of collective bargaining agreements, the players in Activision’s esports leagues are not members of a union and never negotiated or bargained for these rules,” the DOJ clarified in the filing.

The case states that Activision would fine teams one dollar for every dollar that exceeded the cap — and redistribute the collected fees among all non-offending teams. For example, the filing says that “if Activision set a Competitive Balance Tax threshold of $1 million, a team that spent $1.2 million on player compensation in a season would pay a $200,000 fine, which would be distributed to the other teams.”

Additionally, the Antitrust Division filed a proposed consent decree that would bar Activision from imposing any further rules that would penalize a team for exceeding a set amount of compensation. It would also require the company to certify that “it has ended all Competitive Balance Taxes in its professional esports leagues, to implement revised antitrust compliance and whistleblower protection policies, and to provide notice and an explanation of the final judgment to teams and players in its professional esports leagues.”

According to the DOJ, the Overwatch and Call of Duty leagues have generated millions of dollars. Microsoft is trying to clear regulatory hurdles to move forward with its planned purchase of Activision Blizzard.

“Video games and esports are among the most popular and fastest growing forms of entertainment in the world today, and professional esports players—like all workers—deserve the benefits of competition for their services. Activision’s conduct prevented that from happening,” said Assistant Attorney General Jonathan Kanter from the DOJ’s Antitrust Division. “Today’s lawsuit makes clear that the Antitrust Division remains committed to protecting workers across all types of industries from anticompetitive conduct.”