Activision Blizzard Accused By Call Of Duty Pros Of Illegal Esports Monopoly

Activision Blizzard's operation of the Call of Duty League is now the subject of a lawsuit brought by two pro players who allege the esports league is an illegal monopoly, one that prevents competition and forces players and teams to agree to "extortionate" financial terms.

The two players are known names in professional Call of Duty circles. Optic Gaming president Hector "H3CZ" Rodriguez and pro player Seth "Scump" Abner, the second winningest player in the game's history, are seeking $680 million in damages from Activision Blizzard. The lawsuit alleges Rodriguez, who ran the Optic Gaming Call of Duty team for years, was effectively forced into a "financially devastating" partnership with billionaire investors in order to satisfy Activision's demands and gain one of the Call of Duty League's coveted 12 team spots.

As noted by the lawsuit recently filed in federal court, prior to the formation of the Activision-owned Call of Duty League in 2019, competitive Call of Duty tournaments were operated by multiple organizations, including GameStop and Major League Gaming. That changed when Activision itself acquired Major League Gaming and later formed the Call of Duty League, effectively shutting down all other professional Call of Duty esport leagues and tournaments other than the ones operated by Activision itself.

Activision has since, the lawsuit alleges, used its Call of Duty esports monopoly "as a virtual nuclear weapon." Though the league is inspired by professional sports leagues like the NFL or NBA, there is no collective bargaining agreement between team owners and players. Unlike professional sports leagues, Activision owns the game itself, and thus can restrict players from earning revenue from outside sources Activision disapproves of.

Teams were required to pay a $27.5 million entry fee to participate in the league. In addition, Activision receives 50% of revenue from ticket sales, sponsorships, and other revenue streams. Players are barred from commercializing Call of Duty gameplay on places like Twitch or YouTube as well, and required to cede potentially lucrative brand sponsorship deals to Activision. The lawsuit alleges players and teams were either forced to accept "draconian anti-competitive terms that were favorable only for Activision and its monopoly," or "exit the market entirely."

"Activision knew that acquiring and maintaining monopoly power over this market would enable Activision to take an extortionate share of this revenue, leaving the remaining table scraps (and all the financial risk) to the players and teams on whose backs Activision would earn that revenue," the lawsuit states.

Earlier this year, Activision Blizzard's esports division was subject to massive layoffs, throwing the future of the league into question. Activision Blizzard's Overwatch League, on which the Call of Duty League was modeled, has since ceased to exist, and much of the esports division responsible for operating the leagues was laid off earlier this year. That fact has added "insult to significant injury," according to the lawsuit, stating the company has "run the Activision CoD League into the ground."

In a statement to Bloomberg, an Activision Blizzard spokesperson said the lawsuit has "no basis in fact or in law" and that it will strongly defend against the claims.

"We are disappointed that these members of the esports community would bring this suit which is disruptive to team owners, players, fans, and partners who have invested so much time and energy into the Call of Duty League's success," the spokesperson said.

Activision Blizzard settled a civil antitrust lawsuit with the US Department of Justice last year over concerns that the Overwatch and Call of Duty League violated antitrust law by capping player salaries in the form of a "competitive balance tax," something Activision removed from the leagues in 2021.