Activision Blizzard settles lawsuit with US government over esport wage suppression

Yesterday, the US Department Of Justice filed a civil suit against Activision Blizzard, accusing the publisher’s Competitive Balance Tax of capping esports players’ wages and penalising Overwatch and Call Of Duty league teams if they exceeded the salary cap.

Like other sports leagues, Overwatch and COD teams remained competitive by offering higher pay to attract and retain the best players. The DOJ say ActiBlizz's rules had the “effect of substantially lessening competition for players by suppressing player compensation… Teams were fined if their total player compensation exceeded a threshold set by Activision each year.” The lawsuit notes that competitive leagues have “generated hundreds of millions” for Activision via sponsorship revenue, streaming deals with YouTube, and a deal with Disney to broadcast the OW League on subsidiaries like ESPN and ABC.

Traditional sports leagues have similar rules in place; they also have player unions who negotiate these pay caps. The DOJ draws the line here because “professional esports players - like all workers - deserve the benefits of competition for their services.”

Alongside the lawsuit, the DOJ proposed a settlement for the case which would forbid the publisher from imposing similar rules - ones that capped player wages or penalised teams based on pay - in the future.

In a statement to gamesindustry.biz, ActiBlizzard say their tax was lawful, but funnily enough, they’re deciding to settle the case and not defend it: “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.” The company mentioned that the tax was never actually levied and was dropped from their rules in 2021 (when the DOJ first began its investigation). ActiBlizzard go on to say they “continue to have the least restrictive player mobility compensation system across all of the major sports leagues.”

Activision Blizzard’s recent history isn’t particularly union-friendly, and by that I mean the company has been hit with two unfair labour charges, accusing the company of union busting, and suppressing discussions around working conditions. Maybe the publisher was quick to settle the case due to their increasingly likely acquisition by Microsoft.

Activision Blizzard are currently the subject of a number of legal actions, labour disputes and allegations of workplace harassment. Rock Paper Shotgun will continue to write about these issues, as well as covering Activision Blizzard games as part of our commitment to cover subjects of interest to our readers. The latest news can always be found under our Activision Blizzard tag.