Activision Blizzardis facing legal trouble once again with the company being sued by the US Department of Justice over allegations that it established a “Competitive Balance Tax.” This lawsuit is just the latest in a series of controversies for Activision Blizzard. In 2020, the company was accused of widespread harassment and discrimination, leading to a walkout by employees and a lawsuit by the California Department of Fair Employment and Housing. The company also faced criticism for its handling of the Hong Kong protests and for allegedlydenying pay raises for employeesat Raven Software due to the unionization efforts, leading to boycotts and protests from players and fans.
According to the complaint, the so-called Competitive Balance Tax was created to avoid wealthier esports clubs from overpaying for the top talent in theCall of DutyandOverwatchesports tournaments. If a franchised club violated the tax by paying its players more than the Activision Blizzard-imposed cap, the teams would be penalized, and the fine money would be split among the other non-infringing teams. However, the DOJ’s lawsuit claims that the tax was implemented to artificially lower player salaries as a whole.
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In response to the charges, anActivision Blizzardspokesperson stated that they “have always thought, and still believe, that the Competitive Balance Tax was legal, and it had no negative influence on player earnings. The leagues voluntarily removed the levy from our rules in 2021 since it was never imposed.”
The DOJ said the settlement indicates that the antitrust division submitted a proposed consent decree to the US District Court for the District of Columbia. The proposed decree would prohibit Activision Blizzard from engaging in similar anti-competitive practices in the future. Activision Blizzard’s legal troubles come at a sensitive time, with the company currently in the process ofbeing acquired by Microsoft, which is the biggest gaming deal in the history of the industry.
The acquisition has alreadyfaced several pushbacks, and the lawsuit and subsequent settlement could further complicate the process. The allegations against Activision Blizzard are particularly significant given the company’s massive impact on the gaming industry. As one of the biggest gaming publishers in the world, the outcome of this lawsuit could have far-reaching consequences for the entire gaming community. The controversy surrounding Activision Blizzard highlights the importance of companies prioritizing fair labor practices and ethical business practices in the gaming industry.
