Valve has been hit with a class-action lawsuit that alleges that the company is abusing Steam’s monopoly for profits. The suit alleges that through their dominance, Steam is responsible for keeping PC game prices high.
Steam is the largest global distributor of PC games. It currently owns 75% of the market share, which effectively means that it has the monopoly, and thus, the power to control the market. While there are some other competitors like Epic Games Store or Microsoft Store, but they are nowhere close to Steam.
Such dominance in the market is probably why a lawsuit has been filed against Valve by Ohio-based law firm Vorys Sater, alleging that the company is involved in unfair market practices.
Ohio-based law firm Vorys Sater has filed a class-action lawsuit against Valve alleging that the company is using Steam’s monopoly on the PC gaming marketplace to force developers to sell their games on Steam and other online platforms at the same price.
The suit mentions a “Most Favored Nations” clause in the Steam Distribution Agreement in which the seller agrees to give the client, i.e., Steam, the best terms that make it available anywhere else. Translated into simple words, the clause forces the developers to have the same price of their games on other platforms like Epic Games Store or Microsoft Store as they are on Steam.
Available via The Hollywood Reporter, the lawsuit states,
“The MFN [Most Favored Nations clause] has the effect of keeping prices to consumers high, as price competition by platforms would cause the prices of PC games sold to consumers to decrease. The MFN also hinders innovation and suppresses output, as it acts as an additional barrier to entry by potential rival platforms and as higher prices lead to less sales of PC games.”The Hollywood Reporter
Apart from Valve, the lawsuit has named CD Projekt, Ubisoft, kChamp Games, Rust LLC, and Devolver Digital as the other defendants, stating that they
“unlawfully contracted, combined, or conspired to unreasonably restrain trade in violation of Section 1 of the Sherman Act by agreeing under the Steam MFN that the game developer Defendants would not sell their PC game products through competing platforms at a price lower than what they offered through Valve’s Steam platform.”CD Projekt, Ubisoft, kChamp Games, Rust LLC, and Devolver Digital
The lawsuit has also cited a January 2019 Tweet from Tim Sweeney, Epic Games CEO, that stated that Steam has “veto power” over prices.
Furthermore, the lawsuit seeks a jury trial and a ruling that states that Steam’s MFN clause is “anticompetitive” and constitutes “illegal monopolization and monopoly maintenance” and an injunction against further anticompetitive actions, financial damages, and legal costs.