Four gamers filed a class action lawsuit against Valve Corporation on Friday, August 9, 2024, alleging that Valve’s Steam video game distribution platform utilizes anticompetitive pricing restraints to maintain market dominance.
Valve launched Steam in the early 2000s to distribute its own computer games. Over time, the platform expanded to distribute games developed and marketed by third-parties. Valve sells games through the Steam Store. The complaint alleges that Valve “takes a staggering 75% of the” billions of dollars generated annually by computer games. The complaint states that “Valve generates its revenues primarily through a 30% tax it imposes on game publishers and, in the end, game consumers.” Valve also takes a 30% cut for payment processing whenever in-game products are sold.
“While Valve imposes its 30% tax on game publishers, the overcharge is ultimately born by consumers in the form of inflated prices for games and in-game products.” The four named plaintiffs are consumers and gamers “who paid those supracompetitive prices and were directly injured as a result.” Two of the plaintiffs reside in California, and the other plaintiffs reside in Florida and Missouri. Valve Corporation is located in Washington.
The complaint alleges that Valve “maintains market dominance by strangling competition with nakedly anticompetitive pricing restraints.” For example, the complaint states that Valve utilizes a platform most-favored nations clause that “prevents any publisher that sells a game on Steam from either (a) selling that game on a rival platform for a lower price (price parity), or (b) providing additional game content or enhancements on a rival platform (content parity).” The complaint argues that rival platforms are not incentivized, and cannot, compete aggressively with Valve on platform fees due to the lack of normal differential pricing. “[F]ees, and thus prices, would be lower in a market functioning without Valve’s [platform most-favored nations clause].”
The complaint highlights examples of “well-resourced platforms [that] have tried to compete with Valve in the sale of PC games and in-game products” and ultimately failed to gain meaningful traction in the marketplace. The complaint states that game publishers have no meaningful ability to drive customers away from Valve. “The failure of these well-resourced rivals, and persistence of Valve'[s] supracompetitive fees for over two decades, illustrates the durable monopoly power Valve exercises over the market.”
The complaint states causes of action for violations of the Sherman Act, the Washington State Consumer Protection Act, and California Unfair Competition Law. The complaint seeks relief in the form of injunctive relief, including a permanent injunction, damages, restitution, treble damages, attorneys’ fees, costs, interest, punitive damages, and declaratory relief.
Valve is currently involved in litigation concerning a game publisher who wished to sell its game on a separate storefront for a lower price. The publisher alleges that a Valve representative stated that selling the game on said storefront for a lower price would result in Valve removing the game from Steam.
Additional Reading
Video game giant Valve hit with consumer class action over pricing, Reuters (August 12, 2024)
Elliott et al v. Valve Corporation (Case No. 2:2024cv01218)
Complaint in Elliott et al v. Valve Corporation
Wolfire Games LLC et al v. Valve Corporation (Case No. 2:2021cv00563)
Photo Credit: Mamun sheikh K / Shutterstock.com
