Gaming platform

Valve loses bid to end Steam gaming platform antitrust case

Valve Corp. faces antitrust litigation over allegations that ‘most favored nation’ policies for its Steam distribution platform have driven up video game prices in the industry, a federal judge has ruled in Seattle .

Judge John C. Coughenour let part of the case move forward in the U.S. District Court for the Western District of Washington, saying it’s plausible that Valve is exploiting its market dominance to threaten and retaliate against developers who sell games for less through other retailers or platforms.

The company “allegedly enforces this regime through a combination of written and unwritten rules” imposing its own terms on how even “games not compatible with Steam are sold and priced,” Coughenour wrote. “These allegations are sufficient to plausibly allege unlawful conduct.”

The May 6 ruling wins the case of the consumers and game publishers behind the proposed class action after the judge twice issued preliminary rulings in favor of Valve.

Coughenour first ordered Steam subscribers to arbitrate their consumer claims in October, then tentatively dismissed the developer’s lawsuit the following month. Consumers who are not Steam subscribers and have never signed its arbitration agreement are still involved in the case.

The consolidated dispute is one of many legal challenges to the standard 30% commission taken by major app sales and distribution platforms in Silicon Valley.

The allegations echo claims that Amazon.com Inc. uses most-favoured-nation policies to raise the price of “virtually all products offered for sale” online in the United States.

The Steam suit also looks like a wave of cases on Apple Inc. AppStore and Alphabet Inc. Google Play Store, although their legal theories differ. Apple has settled a developer lawsuit for $100 million and is appealing a court order demanding costly changes to the App Store.

Coughenour cut the Valve case on May 6, dismissing claims that the Steam store and gaming platform operate in separate markets that the company binds. There’s no plausible allegation of consumer demand for “fully functional gaming platforms separate from gaming stores,” he said.

But the judge let most-favoured-nation claims advance, reversing his earlier skepticism that Steam commissions are “supercompetitive.” He had previously found that their stability over time showed that Valve had not increased its prices as it gained market share.

In fact, when the company only competed with physical retailers, it “did not need market power to charge fees well above its cost structure because those physical competitors had a much higher cost structure,” Coughenour wrote. . That makes the analysis from apples to oranges, he said.

The developers are represented by Constantine Cannon LLP. Consumers are represented by Quinn Emanuel Urquhart & Sullivan LLP and Vorys, Sater, Seymour & Pease LLP.

Valve is represented by Fox Rothschild LLP and Montgomery McCracken Walker & Rhoads LLP.

The case is Wolfire Games LLC v. Valve Corp., WD Wash., #21-cv-563, 5/6/22.