U.S. Government Sues Activision Blizzard

U.S. Government Sues Activision Blizzard

Activision Blizzard is beset with legal troubles again, as the United States federal government is now weighing in, with the Justice Department accusing the video game company of establishing a “competitive balance tax” on esports tournaments it oversees.

Just What is a “Competitive Balance Tax?”

According to the lawsuit, the “competitive balance tax” was invented to avoiding “overpaying” esports players by penalizing teams and organizations associated with Activision Blizzard who overpaid their players. Though, according to the lawsuit, the tax was more often than not used to artificially lower players’ pay overall.

For their part, Activision Blizzard has slammed the lawsuit and accusations of lowering player pay. The company released a statement defending the “competitive balance tax.”

“(We) 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.”

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The Bigger Picture

This lawsuit and accusation of anti-competitiveness falls into place just as Microsoft is desperately trying to acquire the Call of Duty titan. While Microsoft is still struggling to get Sony and PlayStation to agree to back the deal, the company, so far, has had success with government agencies and getting them to agree to the merger.

But this lawsuit throws that belief into question. Depending on where the lawsuit goes, it may affect more than just Activision Blizzard’s esports market.

Yet Another Stumbling Block

This latest lawsuit is just one on a long list of complaints, lawsuits, and protests issued against Activision Blizzard in recent years. From 2020’s massive sexual abuse and discrimination lawsuit to another scandal of Activision Blizzard reportedly spying on their employees.

Clearly the company has troubles. Perhaps Microsoft will be the one to try and fix them, assuming the deal goes through. But for now, Activision Blizzard is on their own when dealing with these lawsuits.

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