Valve is now the subject of a putative class action in a California federal court over allegations that its contracts with game developers for publishing their wares via Steam includes anti-competitive language that artificially inflates the prices of games and prevents other stores, like the Epic Games Store and Microsoft Store, from competing effectively.
The thrust of the lawsuit, first reported on by The Hollywood Reporter, relates to what’s called a ‘Most Favored Nations’ (MFN) clause in the Steam Distribution Agreement. The lawsuit asserts that Valve is abusing its power as the owner of the most influential digital games platform on PC by forcing game developers to “agree that the price of a PC game on the Steam platform will be the same price the game developers sell their PC games on other platforms.”
“The Steam MFN also hinders innovation by creating an artificial barrier to entry for platforms,” the document continues. It goes on to explain that if a competing platform, like the Epic Games Store or the Microsoft Store, wanted to gain more market share, they could “provide the same (or higher) margins to game developers while simultaneously providing lower prices to consumers.” However, the MNF prevents such arrangements and artificially restricts competition in the market, according to the lawsuit.
Valve was recently also the subject of a fine in the E.U. over so-called geo-blocking practices. The company was found to be locking steam keys into specific territories, such that they wouldn’t work in another country. This went against the E.U.’s Digital Single Market doctrine and prevented cross-border sales. Valve, which refused to cooperate with the E.U., was fined over €1.6 million.