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There have been a number of cases between giants going head to head in the courtroom of late. Apple is currently at loggerheads with Epic in California over its app store fees, Microsoft has just had to acquiesce its 30 percent cut on PC and now Valve faces the same issue from PC gaming platform Steam.

In the same manner, as the recent Epic v. Apple, the Valve Steam suit is also centered around the platform owner having a monopoly of sorts. As PC gamers require Steam to operate any Valve game they can effectively dominate. It is the same with Epic and Apple iOs. These suits bring to light the tax implications. Potentially, they could be sold as a standalone elsewhere, ultimately bringing lower consumer prices but Apple and Steam have a grip that forces other developers into paying them a cut to use their distribution. 

Like Apple v. Epic, Like Valve v. Humble Bundle

According to Wolfire Valve controls roughly 75 percent of the entire PC gaming market. The company makes an estimated $6 billion in annual revenue from its 30% fees. Five years ago in an article concerning their skin gambling, the company revealed to The Verge that they had around 360 employees. As Sean Hollister points out; if you take this figure and assume a fair share then that is over $15 million a year each.

“Valve abuses its market power to ensure game publishers have no choice but to sell most of their games through the Steam Store, where they are subject to Valve’s 30% toll,” argues indie game developer and Humble Bundle creator Wolfire Games, in a lawsuit filed Tuesday (via Ars Technica).

The list of reasons that developers believe there is an abuse of power going on is quite lengthy but here is the crux of the matter in simple terms that need to be addressed.

  •  Other companies have tried to compete directly with Steam for years to no avail, cornering nowhere near a meritable portion of the market. Even when offering developers a bigger cut of the profits. Such was the case with Epic offering as much as 88%.
  • Publishers are unable to sell PC games at a lower price off of the Steam platform. Because of this, they cannot compete fairly. And so none have ever managed to find their footing in the market waters with such a shark as a rival.
  • Many have simply given up trying to compete, with EA and Microsoft both crawling back to the platform with their games.
  • Both of the above develop and distribute pretty popular games and had recognizable brands, reputations, and financing that could have made them stiff competition. But if they can’t swim with the big fish how do smaller indie developers stand a chance? In light of this Steam remains the dominant platform and other companies are reduced to selling via the giant.

Wolfire’s Humble Bundle suffered at the hands of Valves regulating, the developer’s opinion was that “publishers became more and more reluctant to participate in Humble Bundle events, decreasing the quantity and quality of products available to Humble Bundle customers.” Wolfire believes this was because they were worried about potential retaliation if the buyers resold their Steam keys for less somewhere else. Wolfire also mentions in their lawsuit that Valve also pulled the plug on a  previous partnership without any explanation. The deal was a keyless version of its Humble bundle that allowed users to have direct integration instead.

Steam has a lot of loyalty, but the claimants make no mention of as to why that might be in any sort of depth. It essentially skims over the finer points, boiling the platform’s popularity down to nothing more than Valve’s anti-competitive practices. The less popular Origin or Microsoft’s Windows Store was underwhelming for many, with the majority of PC gamer’s needs unaddressed. Steam on the other hand has great communication between community and developers, so it probably isn’t down to price.

Valve is yet to comment on how they feel about the proceedings. Click at the link to find a document.

This is not the first case

The company has, however, previously seen similar complaints. Back in January, a group of game buyers filed an antitrust action over its Most Favoured Nation retail parity clause. The clause keeps the prices of PC games higher elsewhere but the group of buyers didn’t just go after Valve they targeted multiple companies who are employing the tactic. This time the lawsuit is by a game company and both suits are looking for class-action results.

With or without a win, app store fees are clearly becoming a hot topic within the industry. Valve is more dominant in the PC gaming space than Apple or Google is in the smartphone market. This is quite a statement given that there are substantially fewer PC gamers than there are phone owners. So there could be a backlash for them as they may struggle with the mounting pressure to justify taking such a high cut.

Especially when you consider that both Apple and Google take a much lower cut from budding developers. This helps smaller, indie start-ups in the market. Each of them asks 15% from any developer with less than a million in sales. Valve recently adjusted its revenue split to bigger companies, lowering their 30% fee to 25% when a developer hits $10 million and down to 20 percent after $50 million. This is not a huge concession and doesn’t provide an easy market to start out in. Epic Games Store on the other hand takes 12% and Microsoft has just matched that dropping from 30%.

Add to that recent talk from the executive vice president of the EU commission Margrethe Vestager who said they were keen to “take an interest in the gaming app market” and the pressure may get too much. Apple was recently deemed by the EU to have broken antitrust laws surrounding its music streaming apps. Valve has also had a history with the European Commission when they were fined for geo-blocking game sales. So who knows what the verdict will be?

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