Blizzard's Departure From China Could Cost It $44 Million Thanks To A Lawsuit - Report

The NetEase and Blizzard divorce just got a whole lot messier.


Update: It now appears the lawsuit was filed by what Wowhead has dubbed a "disgruntled gamer," rather than NetEase. The original court filing has been amended to remove the indication that it was NetEase doing the suing, which may explain why Activision Blizzard said it's yet to receive the lawsuit. The individual in question reportedly sued NetEase previously over an issue with World of Warcraft, a case that ultimately didn't go anywhere. The original story follows.

Blizzard and NetEase ended a 14-year partnership earlier this year. The pact had allowed the US publisher and developer to release its games inside of China. While both sides have blamed each other for the breakup, the divorce just got messier as NetEase is reportedly now suing Blizzard for $43.5 million for a wide number of claims, though Activision Blizzard says it's yet to receive the lawsuit.

According to the lawsuit that was first reported by Sina Technology (via Wowhead), NetEase claims that Blizzard had promised refunds to more than 1 million players who wanted them when the Chinese servers went offline for Warcraft, Diablo, Overwatch, StarCraft, and Heroes of the Storm on January 23, but this task fell to NetEase. The company is also seeking compensation for unsold merchandise inventory and claims that Blizzard violated licensing agreements, and demands redress for "unequal provisions" because of those violations.

Lastly, the lawsuit mentions "overlord clauses" between NetEase and Blizzard. This deal required NetEase to pay a sizable deposit in advance for several of Blizzard's games, but Blizzard did not refund the company when these were not developed. As noted by PC Gamer, the wording of this deal could involve other products for Chinese consumers, such as existing products being retooled to pass the notoriously strict registration rules of that market.

In a statement shared with GameSpot, an Activision Blizzard spokesperson said, "We haven't received the lawsuit yet, but we are confident we aren't in breach of any licensing agreements. The terms NetEase appears to be complaining about reflect standard industry practice and have been mutually-beneficial for years. While this persistent campaign by one former partner is disappointing and puzzling, it's important to note that we have enjoyed nearly two decades of positive experiences operating in China, and remain committed to serving players and protecting their interests."

Activision Blizzard was recently sued by the US Department of Justice in a civil antitrust lawsuit, which appears to have been settled on the same day it was filed. Activision Blizzard also reached a settlement deal with the Securities and Exchange Commission in February that saw the company pay $35 million. That stemmed from claims that it "failed to maintain disclosure controls and procedures to ensure that the company could assess whether its disclosures pertaining to its workforce were adequate." The settlement did not require Activision Blizzard to admit or deny any wrongdoing.

Activision Blizzard has faced a wave of criticism in recent years over a variety of these workplace issues, and for more details, you can check out a timeline of all the major lawsuits and issues.

This story has been updated to clarify the nature of the DOJ and SEC settlements.

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