Valve Sued by Indie Game Developer Over Steam Store Rules

Independent developer Wolfire Games, a digital storefront for bundled games, has filed a lawsuit against Valve, claiming that the 30 percent commission it charges in its Steam Store is monopolistic and anticompetitive. According to Wolfire, Valve controls about 75 percent of the entire PC gaming market, earning an estimated $6 billion in annual revenue from its 30 percent commission. The lawsuit follows Epic Games’ suit against Apple, currently in court, and Microsoft’s decision to slash its own commission fee.

The Verge reports Wolfire Games charges that, “Steam doesn’t allow publishers to sell PC games and game keys for less money elsewhere,” and notes that “every other company’s attempt to compete with Steam has failed to make a dent, even though many of them offered developers a bigger cut of the profits, such as the Epic Game Store’s 88-percent revenue share.”

As a result of not being able to compete on price, “most of those rival game stores have largely given up … and [Electronic Arts and Microsoft] have each brought their games back to Steam,” ensuring that “Steam stays the dominant platform.”

According to Wolfire, as a result, “publishers became more and more reluctant to participate in [digital storefront] Humble Bundle events,” largely due to fears of retaliation if they “resold their Steam keys on the grey market for cheap.” The lawsuit also claims that, although Valve used to work with Humble Bundle on “keyless direct integration,” it “abruptly pulled the plug on that partnership with no explanation.”

Individual game buyers “filed a fairly similar complaint in January … [and] each suit is hoping to win class-action status.”

Pressure may also come from the EU, after European Commission executive vice president Margrethe Vestager said it would “take an interest in the gaming app market.” The Commission already fined Valve earlier this year for geo-blocking game sales. In 2018, Valve reduced its 30 percent cut to 25 percent “after a developer racks up $10 million in sales, and down to 20 percent after they hit $50 million.”

Ars Technica reports that Wolfire’s lawsuit, which was filed in a Washington state federal court, states that, “at bottom, Valve’s scheme imposes a massive tax on the PC desktop gaming industry.” The suit “centers on what it considers an illegal tying of the Steam gaming platform (which provides game library management, social networking, achievement tracking, Steam Workshop mods, etc.) and the Steam game store (which processes online payments and delivers a copy of the game).”

The suit adds that most PC gamers are “locked into the Steam platform thanks to ‘immense network effects’ and the high switching costs to move to a new PC platform … [which] makes the platform ‘a must-have for game publishers,’ who need access to the players on Steam to succeed.” As a result, Steam acts as a gatekeeper to the store, wielding monopoly power.

The suit also lists rivals that have tried and failed to compete with Steam, including CD Projekt Red, EA, Microsoft, Amazon and Epic as well as “pure distributors” such as GameStop, Green Man Gaming, Impulse and Direct2Drive. The suit also notes that Valve places strong restrictions on its Steam keys, which act as “a tool to maintain Valve’s dominance.”

Related:
Microsoft to Judge: Apple’s Rules Blocked Our Gaming Service Too, Bloomberg, 5/5/21