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Steam In Hot Water On Both Sides Of The Pond

A group of gamers delivers a punitive class action to the Valve Corporation in a California court.

By Silek Tue 02 Feb, 2021 11:29 AM - Last Updated: Tue 02 Feb, 2021 4:35 PM
Accusing the Steam gaming platform of abusing it's market power and artificially raising the price of PC games, a group of gamers delivered a punitive class action to the Valve Corporation in a California court last Thursday demanding it change it's polices towards game developers.

The action centers around a clause in the Steam Distribution Agreement commonly referred to as the 'Most Favored Nations' provision. It states that game developers will never allow their games to be sold on any platform for a lower cost than it sells on Steam.

The complaint states, "Valve Corporation’s Steam platform is the dominant platform for game developers to distribute and sell PC games in the United States, but the Steam platform does not maintain its dominance through better pricing than by rival platforms. Instead, Valve abuses the Steam platform’s market power by requiring game developers to enter into a 'Most Favored Nations' provision contained in the Steam Distribution Agreement whereby the game developers agree that the price of a PC game on the Steam platform will be the same price the game developers sell their PC games on other platforms."

While attacks on the 'MFN' clause has been seen in other industries, often causing them to be seen a 'exclusionary' or 'discriminating', this is the first time it's been seen targeting a platform as big as Square, in the market and space it helped create and define.

The complaint goes on to state, "The Steam 'MFN' also hinders innovation by creating an artificial barrier to entry for platforms. When a market, such as this one, is highly concentrated, a new entrant can benefit consumers by undercutting the incumbent’s prices. The ability to provide PC games to consumers at lower prices is one way a firm or new entrant could gain market share. If this market functioned properly—that is, if the Steam 'MFN' did not exist and platforms were able to compete on price—platforms competing with Steam would be able to provide the same (or higher) margins to game developers while simultaneously providing lower prices to consumers."

Earlier the same week, E.U. Antitrust Authorities fined Valve, and five other publishers €7.8 million for breaching E.U. Antitrust rules.

A European Commission press release states, “Valve and the publishers restricted cross-border sales of certain PC video games on the basis of the geographical location of users within the European Economic Area (‘EEA'), entering into, the so called “geo-blocking” practices. The fines for the publishers, totalling (sic) over €6 million, were reduced due to the companies' cooperation with the Commission. Valve chose not to cooperate with the Commission and was fined over €1.6 million."

Valve didn't immediately respond to multiple outlet's request for comment.


We'll be following this litigation closely. Let us know what you think in the comments below.


WRITTEN AND EDITED BY Silek
2 Comments
Wed 03 Feb, 2021 2:40 PM
"When a market, such as this one, is highly concentrated, a new entrant can benefit consumers by undercutting the incumbent’s prices. The ability to provide PC games to consumers at lower prices is one way a firm or new entrant could gain market share."
The claimants aren't part of Epic games by any chance, I wonder?

It's an interesting clause that I wasn't aware of in Steam's Distribution Agreement. I can't find a version of it to read online either. It does concern me that Valve have decided to have this clause in their agreement: Can you imagine a major supermarket dictating that in order for a product to be sold in its stores, the price had to be fixed everywhere else it is sold? No one would sell through them. It's clearly only because of their dominant position Valve are able to do this.
Wed 03 Feb, 2021 6:37 PM
I don't have a real big issue with this. The MFN Steam's had has been there from the start, it's not something added recently or anything. Meaning Steam has had this since it was nothing but a Valve Game Launcher till the market leader it is now. GoG has steadily gained market share against Steam and Epic's platform has to although I have a barrel of issues with Epic.