Just two days before Apple is brought to a California court to justify its 30 percent App Store fee – and two days after Microsoft ditched its 30 percent cut on PC – we learn that gaming giant Valve is now having lawsuits against its own 30 percent . percent discount and alleged anti-competitive practices with its PC gaming platform Steam.
“Valve is abusing its market power to ensure that game publishers have no choice but to sell most of their games through the Steam store, where they are subject to Valve’s 30% toll,” argues indie game developer and Humble Bundle maker Wolfire Games, in a lawsuit filed on Tuesday (via Ars Technica).
Like Epic v. Apple, the new suit states that a platform owner has an effective monopoly where people run their software (there, iOS; here, Steam) to dominate and tax an entire separate industry (alternative app / game stores), an industry that could theoretically thrive and produce lower prices for consumers if not for (Apple’s / Valve’s) iron grip.
Wolfire claims that Valve now controls “about 75 percent” of the entire PC gaming market, bringing in an estimated $ 6 billion in annual revenue as a result of that 30% fee alone – more than $ 15 million per year per Valve employee, assuming that the company is still somewhere near its 360 employees it confirmed five years ago.
To how Valve may be misusing its power, there’s a laundry list of complaints you might want to read in full (that’s why I’ve enclosed the complaint below), but the arguments seem to boil down to:
- Every other company’s attempt to compete with Steam didn’t make a dent, even though many of them offered developers a bigger discount on the profits, like the Epic Game Store’s revenue share of 88 percent.
- Steam does not allow publishers to sell PC games and game keys elsewhere for less money
- That, in turn, means that rival game platforms cannot compete on price, preventing them from gaining a foothold
- Most of those rival game stores have largely given up, like how EA and Microsoft each brought their games back to Steam
- That ensures that Steam remains the dominant platform as companies do could become competitors are reduced to simply feeding the steam engine with their games or selling Steam keys
Wolfire says the Humble Bundle in particular has become a victim of Valve’s practices – the lawsuit alleges that “publishers have become increasingly reluctant to participate in Humble Bundle events, reducing the quantity and quality of products available to Humble Bundle customers. “because she feared retaliation if Humble Bundle buyers resell their Steam keys cheaply on the gray market – and although Valve once worked with Humble Bundle on a keyless direct integrationthe lawsuit alleges that Valve abruptly pulled the plug on that partnership without any explanation.
As you’d expect, the lawsuit doesn’t waste much ink, given the fact why gamers may prefer Steam over EA’s Origin or Microsoft’s Windows Store out there the simple matter of price; I would say that most of the Steam competitors fall a bit short when it comes to addressing the many wants and needs of PC gamers. But that’s no excuse for Valve’s anti-competitive practices, assuming these claims are true.
Valve did not respond to a request for comment.
This isn’t the first lawsuit filed against Valve; a group of individual game buyers filed a fairly similar complaint in January, and I have also enclosed the new modified version of that complaint below. But that earlier complaint also charged game companies besides Valve – this new lawsuit is by a game company itself.
Each series hopes to win class action status.
Whether these plaintiffs succeed against Valve or not, the pressure is clearly mounting to lower these app store costs across the industry, and Valve may have a harder time justifying them than most – it seems more dominant in the PC gaming space than Apple or Google are in the smartphone, even though there are far fewer PC gamers than phone users.
Valve hasn’t necessarily made a huge concession to game developers so far either. In 2018, Valve adjusted its revenue split to give larger companies more money, cutting the 30 percent cut to 25 percent after a developer made $ 10 million in revenue, and cutting it to 20 percent after they hit $ 50 million . (Apple and Google are slashing their cuts to 15 percent for developers with revenues below $ 1 million, theoretically helping smaller developers rather than bigger ones.) But the Epic Games Store only costs 12 percent, and the Windows Store from Microsoft just copied that lead by cutting its 30 percent down to 12 percent.
The EU may also exert additional pressure in the future; Yesterday, European Commission Vice President Margrethe Vestager revealed that it would also be “interested in the gaming apps market” after concluding that Apple has violated EU antitrust laws on music streaming apps. The European Commission has already put Valve on its radar; it fined the company for the sale of geo-blocking games earlier this year.