As reported by THR, this lawsuit claims that Valve does not maintain its dominance over the PC market by offering better prices on Steam than other platforms, but does so by abusing its power to require developers to enter what is known as a ‘Most Favored Nations’ clause.
“Valve Corporation’s Steam platform is the dominant platform for game developers to distribute and sell PC games in the United States,” states the complaint being handled by attorneys at Vorys, Sater, Seymour, and Pease. “But the Steam platform does not maintain its dominance through better pricing than by rival platforms. Instead, Valve abuses the Steam platform’s market power by requiring game developers to enter into a ‘Most Favored Nations’ provision contained in the Steam Distribution Agreement whereby the game developers 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.”
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The lawsuit also alleges that, because Valve requires developers to enter this ‘Most Favored Nations’ clause, it “hinders innovation by creating an artificial barrier to entry for platforms” and keeps prices high on other digital storefronts like the Epic Games Store and the Microsoft Store.
“The Steam MFN also hinders innovation by creating an artificial barrier to entry for platforms,” adds the complaint. “When a market, such as this one, is highly concentrated, a new entrant can benefit consumers by undercutting the incumbent’s prices. The ability to provide PC games to consumers at lower prices is one way a firm or new entrant could gain market share. If this market functioned properly—that is, if the Steam MFN did not exist and platforms were able to compete on price—platforms competing with Steam would be able to provide the same (or higher) margins to game developers while simultaneously providing lower prices to consumers.”
CD Projekt S.A., CD Projekt, Inc., Ubisoft Entertainment S.A., Ubisoft, Inc., Ubisoft L.A., Inc., kChamp Games, Inc., Rust, LLC, and Devolver Digital, Inc. are also included as defendants on the lawsuit, with the plaintiffs accusing these companies of agreeing with the Steam platform to the Steam MFN.
This new class action lawsuit follows Valve, Capcom, Bandai Namco, Focus Home, Koch Media, and ZeniMax being fined $9.4 million by the European Commission over the practice of “geo-blocking.”
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