Valve Faces Massive £656 Million Lawsuit in the UK Over Alleged Antitrust Violations on Steam

The gaming giant Valve Corporation is facing a massive £656 million ($843 million) lawsuit in the United Kingdom.

The suit alleges that Valve’s dominant position in the PC gaming marketplace through its Steam platform has led to anti-competitive practices and inflated game prices.

Let’s dive into the details.

Who is suing Valve and why?

The lawsuit has been filed on behalf of Vicki Shotbolt, a children’s digital rights campaigner, by the law firm Milberg London.

According to the BBC, the suit accuses Valve of “overcharging 14 million PC gamers and abusing its dominant position in the UK.”

At the heart of the matter is Steam’s massive market share in digital PC game distribution.

The plaintiffs argue that such dominance allows Valve to partake in practices that suppress competition and consequently harm consumers.

What Are the Key Allegations Against Valve?

The lawsuit centers around three key allegations:

1. Price parity clauses: The lawsuit claims that Valve imposes contractual obligations on game developers, preventing them from offering lower prices on other platforms. This practice, if true, limits price competition across different storefronts.
2. Tying of add-on content: The suit claims that all additional content for games purchased on Steam must also be bought through Steam. This “tying” practice could limit consumer choice and competition.
3. Excessive commission: Valve’s 30% cut on game sales is described as “excessive,” with the plaintiffs arguing that it lead to higher game prices for consumers.

How Does Valve’s Revenue Share Compare to Other Platforms?

The 30% commission has long been a point of contention in the industry.

While it was once the standard, competitors like the Epic Games Store and Microsoft Store have reduced their takes to just 12%.

This disparity has led to growing dissatisfaction among developers, with some high-profile figures like Epic Games’ CEO Tim Sweeney openly criticizing Valve’s policies.

Despite facing pressure, Valve has largely maintained its stance on its revenue share model.

A slight adjustment in 2018 introduced a tiered system where the cut can drop to as low as 20% for high-selling titles, but many argue this doesn’t go far enough.

Has Valve Faced Legal Challenges Before?

Yes. The company has a history of legal battles related to Steam:

1. In 2018, Valve was fined $2.4 million in Australia for lacking a proper refund policy before 2015.
2. In 2021 (enforced in 2023), it faced a $1.73 million fine for “geo-blocking” practices that restricted game key activations across different regions.
3. In 2021, Valve faced similar antitrust lawsuits in the United States where Wolfire Games, the developer of Overgrowth and Receiver, filed a lawsuit, alleging that Steam extracts an extremely high cut from nearly every sale that passes through it.

Despite these fines, Valve’s revenue from Steam remains astronomical. A 2023 VG Insights report estimated that Steam earned over $9 billion in revenue that year alone.

A Watershed Moment for Digital Distribution?

While Steam has been a cornerstone of PC gaming for years, this case underscores the growing scrutiny of digital monopolies and the demand for fairer practices.

As the UK is known for similar “Antitrust” lawsuits, as we have seen with the recent Apple App Store policy changes due to the strong lawsuits, this lawsuit also seems to be at that powerful level.

The case has been filed as a “collective action,” similar to a class-action lawsuit in other jurisdictions.

Vicki Shotbolt is representing approximately 14 million UK Steam users who are allegedly affected by Valve’s practices.

However, before proceeding to trial, the claim must be authorized by the UK’s Competition Appeal Tribunal.

Interestingly, Milberg London, the law firm behind this lawsuit, has also taken on Sony in 2022 for similar reasons – alleging “unfair terms imposed on PlayStation game developers and publishers”.

That case was authorized to proceed by the Tribunal in November 2023, which might set a precedent for the action against Valve.

What’s the Potential Impact on PC Gamers?

If the plaintiff wins, this lawsuit could lead to significant changes in how Steam operates:

1. Lower Prices: A reduction in Valve’s commission could translate to lower game prices for consumers.
2. Increased Competition: Other digital storefronts might gain more market share, leading to a more diverse and competitive landscape.
3. Changes in DLC Policies: The way add-on content is sold and distributed might evolve, giving players more options.

Even if Valve emerges victorious, the heightened scrutiny may lead to voluntary policy modifications to circumvent potential legal challenges.

In the short term, gamers are unlikely to see immediate changes. Steam will continue operating as usual while the legal process unfolds.