Activision Hit With $100M Lawsuit From Pro Gamers Over Claims It Monopolized ‘Call of Duty’ Tournaments

Winston Cho
·4 min read

Activision Blizzard is facing a lawsuit accusing it of monopolizing the market for Call of Duty leagues and tournaments.

Professional gamers Hector “H3cz” Rodriguez and Seth “Scump” Abner, in a lawsuit filed on Thursday in California federal court, allege that the gaming giant violates antitrust laws by preventing “would-be competitors from entering the market” and coercing players and team owners into acquiescing to “extortionate financial terms.” They point to restrictions on their ability to earn compensation from sources besides Activision through endorsements or streaming, as well as mergers intended to cement the company’s alleged monopoly power.

More from The Hollywood Reporter

In a statement, a spokesperson for the company said the plaintiffs “demanded that Activision pay them tens of millions of dollars to avoid this meritless litigation, and when their demands were not met, they filed.”

According to the complaint, the market for Call of Duty leagues and tournaments was competitive until 2019, with multiple entities — including Activision, GameStop and Major League Gaming — hosting events. They mostly had modest entry fees, which ensured that the best players and teams were able to participate, the suit says.

But that year, the gamers say Activision, which made the title, started to demand top players and teams to agree to “rent-seeking demands and various trade-restraining contractual provisions” that allegedly violate the Sherman Act, an antitrust law that, among other things, bars illegal restraints of trade. Abner says he was forced to sign a contract during a photoshoot “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.”

According to the suit, teams must pay a $27.5 million entry fee to compete in tournaments, give Activision half their revenue from ticket sales and sponsorships and cede to the gaming giant the exclusive right to contract with the most lucrative sponsors, such as Monster Beverage, Mountain Dew and USAA Insurance, and broadcasters.

Activision’s league was modeled after traditional sports leagues, like the National Basketball Association, the suit says. But unlike those leagues, the company did not have a collective bargaining agreement with players and team owners.

While players in other pro sports leagues have agreed to salary restrictions as a result of bargaining, esports players are not members of a union and never negotiated for the rules. There are exemptions in antitrust laws for agreements that restrict player salaries and rights if they are arrived at through the collective bargaining process, according to legal experts.

The suit also takes issue with Activision’s acquisition in 2016 of Major League Gaming Corporation, which was the leading organizer of professional Call of Duty tournaments at the time. That purchase was not subject to pre-merger notification requirements and subject to oversight by the Federal Trade Commision.

And because Activision owns the copyright to the game, it refused to grant licenses to organizer and operators of other competitions, the gamers claim.

“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, in the complaint.

The gamers bring claims for unfair competition and violations of various antitrust laws. They seek at least $100 million and a court order prohibiting further anticompetitive conduct.

Activision did not immediately respond to a request for comment. In October, Microsoft closed a $69 billion deal to purchase the company after it defeated a lawsuit from the Federal Trade Commission. The merger is believed to further entrench the firm’s position as a gaming giant.

Last year, Activision settled a suit brought by the Department of Justice accusing the company of imposing rules that illegally stymied competition for players in two of its esports leagues and suppressed wages. The agency cited a complaint over the so-called competitive balance tax in Activision’s Call of Duty and Overwatch leagues. The rule, which the leagues’ independently-owned teams have to abide by, imposes a tax on teams if their total salaries for players exceed a certain threshold.

Under a settlement, Activision was barred from establishing any rule that would in any way restrict wages for players or penalize a team for going over the salary cap for players.

Best of The Hollywood Reporter