An antitrust lawsuit listed with an address in Glendale, California claims that Valve Corporation violated Section 1 of the Sherman Antitrust Act with their Steam platform. According to the suit, Valve has been maintaining market dominance over PC gaming by requiring game developers to enter a Most-Favored-Nation (MFN) clause.
In global economic terms, an MFN clause is when a country is required to provide equal privileges to all nation members of the World Trade Organization. In the case of the Valve lawsuit, game developers agreed to make the price of their PC game on Steam to be the same price as their game on other publishing platforms. The lawsuit alleges that Valve’s MFN clause keeps the price of games high on the other digital platforms and mentions the Epic Games Store and the Microsoft Store as examples. A keypoint worth noting is that both the Epic Games Store and the Microsoft Store take far smaller cuts of game sales than Valve’s 30% cut for every purchase made on Steam, even though prices are the same on each platform.
The complaint states that the Steam MFN “hinders innovation by creating an artificial barrier to entry for platforms… 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.”
Valve isn’t the only defendant listed on the lawsuit. The other defendants are the game developers that agreed with the terms of the Steam MFN, which includes Ubisoft, CD Projekt Red, kChamp Games, Rust LLC, and Devolver Digital. The lawsuit alleges that the developers all wouldn’t sell their products on other platforms lower than the price that they offered on Steam.
This class action lawsuit is related to the investigation of Valve by the European Commission, which started in 2017. In mid January 2021, the European Commission fined Valve, Capcom, Bandai Namco, Koch Media, Focus Home, and ZeniMax a net amount of $9.4 million for breaking EU antitrust laws by restricting access to their content to citizens of certain countries. Valve rejected the notion that it practiced geo-blocking and was the only company of those that were investigated that refused to cooperate with the European Commission.
For the new lawsuit, none of the developers mentioned as defendants have responded to the antitrust allegations except for Devolver Digital, who has indicated that they will be fighting the lawsuit in court. It’s clear that Valve won’t be going down without a fight either. In the next few months we’ll be able to see if Valve requires an MFN and if that’s the case, the gamers in Glendale might be able to prove that Valve is guilty of maintaining a monopoly over digital PC game retailers.