More legal headaches for Valve.
Valve is being sued in the UK for £656 million ($843 million) over claims that it uses Steam’s dominance in the PC gaming marketplace to shut out competition and overcharge for games.
The lawsuit, filed on behalf of children’s digital rights campaigner Vicki Shotbolt by law firm Milberg London (via the BBC), accuses Valve of “overcharging 14 million PC gamers and abusing its dominant position in the UK.”
“Companies who hold a dominant position in a market are not allowed to charge excessive or anti-competitive prices,” Milberg said at steamyouoweus.co.uk, a website dedicated to the lawsuit. “They also cannot impose other unfair trading conditions that prevent or hinder others from competing with them.
“We believe Valve Corporation has been unfairly shutting out competition for PC games and in-game content, which has meant that UK customers have paid too much for these products.”
The suit also alleges that Steam’s pre-eminence has enabled Valve to continue charging “an excessive commission of up to 30%” to game publishers, which in turn “results in inflated prices for consumers.”
The lawsuit turns on three key points: That Valve imposes price parity obligation clauses on developers, preventing them from offering lower prices on other platforms; that all add-on content for games purchased on Steam must also be purchased through Steam, a practice known as tying; and that the cut it takes on all sales through Steam—the aforementioned “excessive commission”—has resulted in excessive pricing on games.
Valve has faced multiple Steam-related legal actions in the past: In 2018, for instance, it was slapped with a $2.4 million fine in Australia for Steam’s lack of a refund policy prior to 2015, and in 2023 it ate a $1.73 million fine (originally imposed in 2021) for “geo-blocking” games—that is, preventing game keys purchase in some geographic regions from being activated in other locations. That’s a lot of money, but it’s also a relative drop in the bucket: A 2023 VG Insights report estimates Steam earned more than $9 billion in revenue in 2023.
Valve has changed its policies on those points, but scrutiny of its revenue cut has persisted. In November 2023, Valve boss Gabe Newell was ordered to testify in person in an antitrust lawsuit quite similar to the one filed by Shotbolt in the UK: Filed by Wolfire Games in 2021, it alleges that Valve uses Steam to suppress competition in the PC gaming market, and to extract “an extraordinarily high cut from nearly every sale that passes through its store.” A separate lawsuit targeting a “Most Favored Nation” clause in the Steam Distribution Contract, which allegedly prevents game developers from offering lower prices on other platforms, was also filed in 2021.
Valve’s 30% take from Steam sales isn’t popular with developers, particularly in light of the fact that other digital storefronts including the Epic Games Store and Microsoft store only take 12%. But the company has repeatedly defended its take and, aside from a revenue share adjustment in 2018 that reduced the cut to as low as 20% based on sales, refused to budge on it. That dogged stubbornness led Valve to get tangled up in Epic’s drawn-out battle with Apple, and also inspired Epic boss Tim Sweeney to call everyone at Valve “assholes.”
This latest lawsuit against Valve has been filed as a “collective action,” which is functionally similar to a class action in that one person—in this case, Shotbolt—will represent a group of people—in this case, the roughly 14 million Steam users in the UK allegedly impacted by Valve’s actions. The claim must be authorized by the UK’s Competition Appeal Tribunal before it can proceed to trial and that hasn’t yet happened, which means the case could be halted before it even gets properly underway.
However, a similar case filed by Milberg against Sony in 2022, alleging the company imposes “unfair terms and conditions on PlayStation game developers and publishers” which results in “excessive and unfair prices” on the PlayStation store, was authorized to proceed by the Tribunal in November 2023.
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