Activision Blizzard has reached a settlement with the Department of Justice over accusations the gaming giant financially punishing Call of Duty and Overwatch esports teams. The DOJ handled a complaint claiming Activision used a “Competitive Balance Tax” that was essentially a salary tax that harmed competition.
The initial lawsuit alleged that Activision Blizzard and the independently owned teams that participate in its Overwatch League and Call of Duty League violated antitrust laws by penalizing teams for paying players above a certain threshold and limiting player compensation in these leagues. The Justice Department said that competition and innovation in the esports market was harmed as a result.
Activision Blizzard said in a statement that the tax was never levied and that it voluntarily dropped it from its rules in 2021. The company also said that it believed the tax was lawful and did not have an adverse impact on player salaries.
“The tax was never levied, and the leagues voluntarily dropped it from our rules in 2021,” an Activision spokesperson told Gizmodo this week. “When we launched The Overwatch and Call of Duty Leagues, we wanted to create viable career opportunities for the players requiring minimum salaries and mandatory benefits as part of player contracts. As a league, we also wanted our products to be competitive, so we carefully designed and implemented the Competitive Balance Tax.”
The Justice Department said that under the settlement, which still needs to be approved by a federal judge, Activision Blizzard agreed to refrain from putting any caps or limits on salaries of esports players or teams.
“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,” Assistant Attorney General Jonathan Kanter said in a press release.
Activision's Previous Issues Over Workplace
This is not the first time that Activision Blizzard has been sued by a government agency over its workplace culture. In July 2021, the California Department of Fair Employment and Housing filed a lawsuit against the company, alleging that it fostered a “frat boy” culture where women were subjected to sexual harassment, discrimination, and retaliation.
In October 2021, the U.S. Equal Employment Opportunity Commission also filed a lawsuit against the company, following a three-year investigation into alleged workplace discrimination.
Microsoft Set to Inherit an Unhealthy Workplace
Microsoft is currently negotiating with and battling regulators in Europe, UK, and mostly notably the FTC in the US to get approval for its $69 billion acquisition of Activision Blizzard. While much of the conversation has been about Microsoft potentially stifling competition in the gaming sector, the company has not spoken about how it plans to change the workplace culture at Activision Blizzard.
For employees in Activision, they may see the deal as a new dawn. Microsoft has taken a more proactive approach to employee actions in recent months. Back in June, Microsoft took a major step by announcing it was open to the idea of labor unions amongst its workforce.
Another acquired gaming giant points to how Microsoft may support Activision employees. In January, a group of around 300 workers from Microsoft's ZeniMax Studios division. You may remember this is the company Microsoft acquired for $7.5 billion in 2020 and is the owner of Bethesda.
The new union has been created by a group of video game testers within the subsidiary. The Communications Workers of America (CWA) points out the union is the largest within the video game industry in the United States.
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