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Activision closed the book on an outstanding issue with the DOJ as it agreed to a settlement this month over a lawsuit related to esports player salaries.
Breaking bread: Activision implemented what it called a “Competitive Balance Tax” in its Call of Duty and Overwatch leagues that the DOJ alleged “effectively operated as a salary cap, penalized teams for paying esports players above a certain threshold, and limited player compensation in these leagues.”
- Activision noted in a statement to The Verge that “the tax was never levied.” The tax was nixed 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 led to a lack of the traditional business infrastructure found in more traditional sport.
“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,” 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.”
As DOJ itself suggested, such a “tax” presents the possibility that a company could use it as a way to institute salary caps, Ward suspects, which would have the effect of holding overall wages at a lower threshold.
Big league chew: The settlement comes as most eyes remain 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, among fear from regulators that the deal could lessen competition in the gaming industry.
- However, the EU recently signaled that it was poised to approve it, while Japan, Chile, Brazil, Saudi Arabia, and Serbia already have, per Polygon.
“No company that’s in the process of being acquired by another company wants outstanding legal action against them,” 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.”