Earlier this week, Valve was hit with a lawsuit. Why? Because it’s accused of using its effective monopoly on the PC gaming marketplace, via Steam, to make developers sell their games on all other digital storefronts at the same price on its own platform (via Hollywood Reporter).
The lawsuit stated that the “Most Favored Nations” provision of the Steam Distribution Agreement means that other storefronts cannot compete on price, meaning they cannot compete at all.
“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 lawsuit also named the following companies as defendants:
- CD Projekt
- kChamp Games
- Rust LLC (Rust LTD)
- Devolver Digital
…stating that these parties were “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”.
“Without the Steam MFN, it would be in the game developers’ independent economic interest to offer their PC games at lower prices on platforms that charge a lower commission than the Steam platform because they could generate the same or even greater revenue per game as a result of the lower commissions, while lowering prices to consumers. Because of the Steam MFN, game developers must account for the Steam platform’s supracompetitive commissions and cannot and do not lower prices on rival platforms.”
So far, Valve has not made a public statement regarding this ongoing lawsuit.