Activision is getting into trouble as the Call of Duty lawsuit involving two esports professionals, Hector Rodriguez and Seth Abner, could cost them $680 Million in damages. The case alleges the company holds an “unlawful 100 % monopoly” over CoD leagues and tournaments. The “lucrative and once-vibrant market” is now bulwarked by the company, preventing other entities from entering the market.
Hector Rodriguez is the founder of the esports and gaming organization OpTic Gaming. Furthermore, Seth Abner is a former CoD player who played for OpTic Texas, a subsidiary of Hector’s company. Call of Duty League (CDL), the case’s central focus, is currently owned and operated by Activision.
Activision’s Practices Are Cutting Gamer’s Revenue
Plaintiffs in the case are alleging that the teams taking part in CDL are co-conspirators allowing the company to shed monopoly in the market. The company capped the tournament at 12 teams after announcing CDL as “a closed league” in 2019. This “coerced” the participating teams to pay a hefty fee of $27.5 Million just for entering the tournament. “Activision forced them to agree to contractual terms” according to the court document.
Furthermore, the lawsuit argues that such practices are causing gamer revenue to go negative as the company now asks for a 50 percent share of the revenue generated through sales, sponsorships, and other streams. Moreover, to pay for the entries, teams had to tie up with big investors.
Rodriguez claims this practice led him into a “financially devastating” partnership where the investors demanded over 90 percent share in his company. Available data shows the company has a valuation of $99 Million. According to an Activision spokesperson, both the plaintiffs demanded the company to pay “tens of millions of dollars to avoid this meritless litigation” and went ahead with filing when their demands weren’t met.
Fear of Companies Shedding Monopoly is Real
Last year, the CoD publisher was acquired by Microsoft for a whopping $69 Billion. The deal was originally announced in January 2022 but faced legal hindrances before it was finalized. Following this, the Widows bearer laid 1,900 employees from Activision, most of them from its esports division.
CoD publisher acquired Major League Gaming in 2016 which, according to the lawsuit, eliminated “Activision’s most significant competitive threat in the professional Call of Duty market — without any FTC approval.” Like in this, Microsoft’s acquisition of CoD publisher had to face a similar situation.
It was speculated that Microsoft’s move would shift a majority of gaming market share in their favor, creating a monopoly. Nonetheless, the deal was later supported by key markets including South Korea, the United Kingdom, Europe, and more.
Where do you think the CDL lawsuit is moving? Tell us in the comments.
