Activision Blizzard Accused of Monopoly Abuse in Professional Call of Duty Leagues
In a recent lawsuit filed in a federal court in Los Angeles, Activision Blizzard has been accused of abusing its “monopolistic” position in relation to the professional Call of Duty leagues. The plaintiff alleges that the company has used its power to force the sale of teams and deprive professional players of fair earnings.
Hector Rodriguez, known by his pseudonym “H3CZ,” and Seth Abner, also known as “Scump,” along with HECZ Hector Rodriguez LLC, are seeking compensation for what they claim to be coerced transactions. According to the lawsuit, the plaintiffs argue that they have suffered damages exceeding $120 million due to Activision’s actions outlined in the lawsuit.
The lawsuit states that Activision, the publisher of the popular Call of Duty series, has “100%” control over the Call of Duty leagues and prevents the establishment of competitive leagues. The company is also accused of intimidating players and team owners to accept anti-competitive terms and conditions.
A significant aspect of the case revolves around the Call of Duty League, which consists of a maximum of 12 teams. Introduced in 2020, the league was designed to resemble traditional team sports leagues.
However, Rodriguez and Abner highlight key legal differences between the Call of Duty League and major professional sports leagues such as the NFL and NBA. In the case of these major sports leagues, players’ unions negotiate collective agreements that govern pay rules, working hours, and working conditions. Collective agreements are exempt from antitrust scrutiny due to salary caps, maximum earnings, and other competition-limiting rules.
In the case of Activision, there are no such collective agreements with professional players, making the rules governing these games subject to antitrust control. Rodriguez and Abner claim that Call of Duty players are “forced to accept” many terms they deem anti-competitive. According to them, professional Call of Duty players are deprived of the opportunity to accept sponsors or contracts with brands, as well as receiving any direct or indirect compensation from non-Activision Blizzard game publishers. Additional streaming agreements restrict how players are compensated for their streams.
The two players also accuse Activision of exerting undue pressure to sign contracts. According to their accounts, contract terms were presented to them at inappropriate times, such as during photoshoots, and the company demanded immediate signatures. Refusal to sign meant risking exclusion from the CoD league.
Activision, which was acquired by Microsoft last year for $69 billion, stated in a statement that the plaintiffs’ demands had no justification in fact or law, and they refused to pay compensation in the “tens of millions of dollars.”
Rodriguez and Abner also describe a situation where Activision allegedly forces Call of Duty league teams to pay an “entry fee” of $27.5 million. Additionally, teams are required to share 50% of certain revenue categories, including ticket sales and sponsorships, and grant Activision the ability to sign exclusive sponsorship and broadcasting deals, which the plaintiffs argue is rent-seeking behavior where Activision benefits without providing equal compensation.
This is not the first time Activision has faced allegations of anti-competitive practices. Last year, the company reached a settlement with the Department of Justice over accusations of suppressing player wages through de facto salary caps. While Activision agreed to implement certain changes to its practices, it did not admit guilt.
Rodriguez is a well-known figure in the esports community. As part of the early wave of esports team owners who entered the investment market before the surge of investments in 2017/2018, he took control of OpTic Gaming in 2007 and developed the organization, focusing on both gaming and content creation. This business model contributed to the growth of the esports industry, attracting investors from sports, media, entertainment, and private capital sectors.
Increased interest from publishers like Activision Blizzard led to the creation of brand-affiliated leagues modeled after the NFL or NBA. Activision Blizzard launched two such leagues, related to Call of Duty and Overwatch, and sold franchise spots in both leagues for nine-figure amounts. While some of the league owners, including Rodriguez, have been longtime proponents of esports, the majority are newcomers, such as Robert Kraft, Stan Kroenke, Mark Ein, and Jeff Wilpon.
A significant portion of the $120 million in damages claimed stems from Rodriguez being allegedly forced to relinquish his ownership and rights. According to the plaintiff, Activision “refused to negotiate with Rodriguez as the sole owner” and pressured him into collaborating with Activision-preferred billionaires. Rodriguez suggests that he and his OpTic team would have been excluded from Call of Duty competition unless he and the investors reached an agreement. The lawsuit highlights that Rodriguez had little leverage in this situation and ultimately gave up 92% of his shares in OpTic.
The lofty expectations for these modern esports leagues never materialized. Monetizing large online audiences proved more challenging than anticipated, and the entire industry experienced a period known as the “esports winter.”
Publishers began cutting expenses, leading to over 6,000 layoffs announced within the first six weeks of 2024, causing disruption in the esports scene. Activision Blizzard effectively shut down the Overwatch League at the end of last year, and Riot Games recently overhauled its North American League of Legends league, prompting organized protests from some professional players.
In the coming weeks, Activision’s legal team will respond to the lawsuit and deny the allegations. The company will also file a motion to dismiss the lawsuit, arguing that the Call of Duty model enhances teams and players’ opportunities, and if forced to adopt an alternative and economically unfavorable model, it may have no choice but to reduce or eliminate player prospects in the Call of Duty league. The company will likely argue that Rodriguez and Abner willingly entered into the transactions, possibly with the advice or the ability to hire legal counsel, and that dissatisfaction is not grounds for voiding the agreement.
FAQ Section:
1. What charges have been brought against Activision Blizzard?
Activision Blizzard has been accused of abusing its “monopolistic” position in relation to the professional Call of Duty leagues, forcing the sale of teams and depriving professional players of fair earnings.
2. Who filed the lawsuit against Activision Blizzard?
The lawsuit was filed by Hector Rodriguez (alias “H3CZ”) and Seth Abner (“Scump”), along with HECZ Hector Rodriguez LLC, seeking compensation.
3. What are the allegations against Activision Blizzard?
The lawsuit claims that Activision Blizzard has “100%” control over the Call of
The source of the article is from the blog elektrischnederland.nl