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Valve Hit with New Class Action Suit Over Anticompetitive Practices in PC Gaming Market

By  |  August 12, 2024
gaming
Valve Software is facing a new class action lawsuit accusing the company of monopolistic practices that have allegedly kept video game prices artificially high and stifled competition in the digital distribution market for PC gaming, according to GeekWire.

Steam’s Market Power Under Scrutiny

Bellevue, Washington-based Valve operates Steam, the leading online storefront for digital video games on PC, Mac and Linux platforms. With over 33 million concurrent users globally at the start of 2024 and an estimated 120 million regular users, Steam is a powerhouse in the gaming industry. Currently, the platform hosts more than 191,000 games.

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    The lawsuit, filed on August 9 in federal court in Seattle by four individuals — John Elliott, Ricardo Camargo, Javier Rovira and Bradly Smith — alleges that Steam has built its market dominance through anticompetitive practices that include “strangling competition with nakedly anticompetitive pricing restraints,” according to GeekWire.

    Allegations of a “Platform Tax” and Price Fixing

    The plaintiffs claim that Steam imposes a 30% “tax” on publishers, which results in higher prices for consumers. Additionally, the lawsuit highlights a “platform most-favored-nations” (PMFN) clause that allegedly prevents competing platforms from offering the same games at lower prices or with additional features compared to what is available on Steam.

    As per the lawsuit, major companies such as Electronic Arts (EA), Microsoft, Amazon, and Epic Games have attempted to challenge Valve’s dominance in the PC gaming market. However, these efforts have reportedly been stymied by the PMFN clause, preventing them from gaining significant traction. According to GeekWire, Epic Games CEO Tim Sweeney has estimated that Steam controls roughly 75% to 85% of the PC gaming market by revenue, although current market share data for 2024 remains elusive.

    Ongoing Legal Battles for Valve

    The class action plaintiffs, represented by Seattle law firm Hagens Berman, argue that Valve’s practices have kept PC gaming costs high by enforcing price fixing and suppressing potential competition. Hagens Berman has previously been involved in other high-profile class action suits, including cases against Amazon and the NCAA.

    Source: GeekWire