Competitors Allege Activision Violates Antitrust Laws

Competitors Allege Activision Violates Antitrust Laws

Activision Blizzard is being sued because it is the only company offering Call of Duty leagues and competitions.

In a lawsuit filed on Thursday, Feb. 15, in federal court in California, professional gamers Hector “H3cz” Rodriguez and Seth “Scump” Abner claim that the gaming giant is breaking antitrust laws by keeping “would-be competitors from entering the market” and forcing players and team owners to agree to “extortionate financial terms.”

They draw attention to mergers meant to strengthen Activision’s purported monopoly power as well as limitations on their capacity to receive payment from sources other than Activision through sponsorships or streaming.

The lawsuit

The company, in a statement, said that the plaintiffs demanded that Activision pay them tens of millions of dollars to avoid this meritless litigation. When their demands were not met, they filed.

However, the case claims that until 2019, there existed competition in the market for Call of Duty leagues and tournaments, with multiple entities, including Activision, GameStop, and Major League Gaming, hosting events. The action claims that because they often had low entrance costs, only the best players and teams were able to participate.

The players claim that Activision, the company that made the title, started to demand top players and teams agree to “rent-seeking demands and various trade-restraining contractual provisions” that allegedly violate the Sherman Act. This antitrust law forbids unlawful trade restrictions, among other things. According to Abner, he was coerced into signing the 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.

The crux of the lawsuit

In the lawsuit, the teams demanded that Activision receive half of their ticket sales and sponsorship revenue, that they pay a $27.5 million entry fee to participate in tournaments, and that they give up all rights to exclusive contracts with the biggest sponsors—including broadcasters, Monster Beverage, Mountain Dew, and USAA Insurance—and sponsors.

According to the lawsuit, Activision’s league was designed with traditional sports leagues, like the National Basketball Association, in mind. In contrast to other leagues, the company did not have a collective bargaining agreement with players and team owners.

Has Call of Duty League created a monopoly?

According to the lawsuit, no limitations were preventing prospective competitors from taking part in Call of Duty eSports events, and the competitive scene for Activision’s best-selling military shooter was open to all before the formation and 2020 launch of the Call of Duty League.

A low barrier to entry and greater flexibility to engage in ancillary economic activities with few restrictions allowed players, organizations, and investors to participate freely in the Call of Duty eSports ecosystem. In this period, team owners were free to move or sell the assets they controlled and pay players what they deemed to be a fair market value.

According to Rodriguez and Abner, Major League Gaming (MLG), the largest third-party event organizer in the competitive CoD ecosystem, was acquired by Activision in 2016, which had a significant impact on the competitive CoD landscape. At the time, Activision Blizzard stated that the goal of the acquisition was to become the “ESPN of eSports.” In the end, this dream was only partially accomplished. CoD competitions were organized by outside organizations like ESL, GameStop, and MLG, among others, before the CDL.

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