[US] Activision settles with DOJ over esports player salaries

In the US, Activision Blizzard has resolved an outstanding issue with the DOJ as it agreed to a settlement over a lawsuit related to esports player salaries, Tech Brew reports.

Activision had implemented what it called a “Competitive Balance Tax” in its Call of Duty and Overwatch leagues. The DOJ alleged that this “effectively operated as a salary cap, penalized teams for paying esports players above a certain threshold, and limited player compensation in these leagues.”

However, Activision reportedly made a statement to The Verge claiming that “the tax was never levied” and it was subsequently cancelled in 2021, following reports of a DOJ investigation.

Lewis Ward - research director of gaming, esports, and VR/AR at IDC - told Tech Brew that the speed of growth in esports leagues over the past decade has resulted in a lack of the traditional business infrastructure found in more traditional sports.

“There’s been this massively accelerated evolution of esports over the past decade, whereas traditional professional sports in the real world have taken about 100 years to perfect what they’ve done,” Mr Ward said. “A lot of steps were skipped in the process that Activision Blizzard was trying to do. One of them being, that without a union on the other side of that bargaining agreement, basically, you’re telling how much people can get paid who are not your workers.”

Mr Ward concurs with DOJ suggestions that such a “tax” presents the possibility that a company could use it as a way to institute salary caps. Something that would hold overall wages at a lower threshold.

The settlement comes as the industry is focused on Activision’s larger plans to be acquired by Microsoft. Microsoft and Activision Blizzard have faced hurdles in the EU, US and UK to get approval for the acquisition. There is reportedly concern from regulators that the deal could lessen competition in the gaming industry.

Nevertheless, the EU recently signalled that it was poised to approve the deal, following earlier assent from Japan, Chile, Brazil, Saudi Arabia, and Serbia, according to Polygon.

“No company that’s in the process of being acquired by another company wants outstanding legal action against them,” Mr Ward said. “You want to button up every single legal outstanding issue that you possibly can to streamline the process of the acquisition going through and ensuring that if it does go through, both companies can land together moving in the same direction without immediate hurdles hitting them in the face.”

Source: Tech Brew

(Links and quotes via original reporting)

In the US, Activision Blizzard has resolved an outstanding issue with the DOJ as it agreed to a settlement over a lawsuit related to esports player salaries, Tech Brew reports.

Activision had implemented what it called a “Competitive Balance Tax” in its Call of Duty and Overwatch leagues. The DOJ alleged that this “effectively operated as a salary cap, penalized teams for paying esports players above a certain threshold, and limited player compensation in these leagues.”

However, Activision reportedly made a statement to The Verge claiming that “the tax was never levied” and it was subsequently cancelled in 2021, following reports of a DOJ investigation.

Lewis Ward - research director of gaming, esports, and VR/AR at IDC - told Tech Brew that the speed of growth in esports leagues over the past decade has resulted in a lack of the traditional business infrastructure found in more traditional sports.

“There’s been this massively accelerated evolution of esports over the past decade, whereas traditional professional sports in the real world have taken about 100 years to perfect what they’ve done,” Mr Ward said. “A lot of steps were skipped in the process that Activision Blizzard was trying to do. One of them being, that without a union on the other side of that bargaining agreement, basically, you’re telling how much people can get paid who are not your workers.”

Mr Ward concurs with DOJ suggestions that such a “tax” presents the possibility that a company could use it as a way to institute salary caps. Something that would hold overall wages at a lower threshold.

The settlement comes as the industry is focused on Activision’s larger plans to be acquired by Microsoft. Microsoft and Activision Blizzard have faced hurdles in the EU, US and UK to get approval for the acquisition. There is reportedly concern from regulators that the deal could lessen competition in the gaming industry.

Nevertheless, the EU recently signalled that it was poised to approve the deal, following earlier assent from Japan, Chile, Brazil, Saudi Arabia, and Serbia, according to Polygon.

“No company that’s in the process of being acquired by another company wants outstanding legal action against them,” Mr Ward said. “You want to button up every single legal outstanding issue that you possibly can to streamline the process of the acquisition going through and ensuring that if it does go through, both companies can land together moving in the same direction without immediate hurdles hitting them in the face.”

Source: Tech Brew

(Links and quotes via original reporting)