Sahar Nicolette  |  February 1, 2021

Category: Legal News

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Video game developer Valve is being sued for abusing Steam market dominance

Valve, the maker of video game distribution service Steam, is abusing the platform’s market power by implementing a provision to protect itself from competition, a class action lawsuit claims.

In an antitrust class action lawsuit filed Thursday by a group of five gamers, Sean Colvin, Everett Stephens, Ryan Lally, Susann Davis and Hope Marchionda, Valve Corporation was accused of violating antitrust laws by enforcing a “most favored nations (MFN)” agreement, in which game developers agreed to not sell their games on other platforms for lower prices. 

As a result of the MFN provision, the complaint contends, other platforms are restricted from competing in the market on price, allowing the Steam platform to abuse its power and monopolize the market. The MFN also has the effect of maintaining high prices for the games being sold, as without any competition to lure customers away and encourage lower prices, prices are kept the same. 

The Steam platform was first released in 2003 and has since expanded to become the dominant video game distribution service, with approximately 75% of all video games sold in the United States being sold through the Steam platform, according to the complaint. As a result, Valve has established a monopoly power over the market due to its high market share, its power to keep prices high, and its ability to exclude any potential rivals, according to the complaint. 

Valve Violated Antitrust Laws, Class Action Alleges 

Antitrust laws are designed to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up, according to the Federal Trade Commission. The complaint says that through Valve Corporation’s alleged actions and the use of MFN’s, antitrust laws, including the Sherman Antitrust Act, were violated.

The class action lawsuit could potentially represent tens of millions of users on the Steam platform, with plaintiffs seeking to receive an injunction, damages and legal costs. The complaint also requests that the judge rules that Steam’s MFN clause is anticompetitive and constitutes illegal monopolisation.

TCA reached out to Valve for a comment and will update the story when we hear back. 

Valve has been at the forefront of antitrust litigation recently, being fined almost $10 million for allegedly using ‘geo-blocking’ technology to stop gamers from buying products at lower prices in other countries. 

In July 2016 a class action lawsuit was filed alleging that Valve Corporation knowingly allowed and profited from illegal and underage gambling on its video games.

Have you used the Steam video game platform? Share your experience in the comments below.

The plaintiffs are represented by Thomas N. McCormick of Vorys Sater Seymour & Pease LLP.

Counsel information for Valve was not immediately available.

The Valve Corp. Antitrust Lawsuit is Colvin et al. v. Valve Corp. et al., case number 2:21-cv-00801, in the U.S. District Court for the Central District of California.

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