The antitrust lawsuit between Valve and Wolfire Games is back on track. The lawsuit was filed in November 2021 for not meeting the required standards, but without prejudice, meaning Wolfire had 30 days to amend the complaint and file it again. Somewhat unexpectedly, that’s what happened, and a judge has now ruled that the case can go ahead.
The original lawsuit alleged that Valve uses its dominance of the PC gaming market through Steam to suppress competition, while extracting “an unusually high cut of nearly all sales that pass through its store”. This keeps game prices artificially high, according to Wolfire, indie developer of games like Lugaru and Overgrowth and creator of the Humble Bundle.
“To pay Valve’s 30% commission, game publishers must raise their prices to consumers and can invest less resources in innovation and creation,” the lawsuit stated. “Players are harmed by paying higher retail prices caused by Valve’s high commissions.”
And while the Epic Games Store has made unprecedented inroads into the digital PC market, it’s actually been cited as a failure in the process because Epic was only able to do so by shelling out big bucks on exclusive offers and giveaways.
Valve naturally defended its practices, saying its 30% cut “has become the ‘industry standard'” and that it actually faces competition from some of the biggest companies in the industry, including Microsoft, Epic and Amazon. It also criticized Wolfire’s lawsuit for lack of specific claims: the allegation that Valve prohibits developers from selling discounted Steam keys through other distributors, for example, arose from “a single anecdote” involving an unnamed developer, the company said. Valve. The judge in the case apparently agreed with that assessment, saying in the ruling that the lawsuit “does not articulate sufficient facts to plausibly allege an antitrust injury.”
The updated costume was enough to at least partially fill in these blanks. A ruling filed on May 9 and available via GameDiscoverCo noted that the amended order does not make new claims, but “provides additional context” to the original allegations. An example is a note about Valve’s acquisition of the World Opponent Network [WON] in 2001, which closed down a few years later, “forcing gamers onto the Steam platform”.
“This denotes market power before that described in the CAC [class action complaint]”, the decision states. “And while both complaints indicate that, in those early days, Defendant was competing with physical game distributors, SAC [second amended class action complaint] makes it clear that Defendant did not need market power to charge a fee well above its cost structure because these brick and mortar competitors had a much higher cost structure.”
It’s not a clear win for Wolfire. Four causes of action in the lawsuit, based on the allegation that the Steam platform and the Steam store operate in separate markets, were dismissed, as was part of the seventh cause of action – and at a loss this time, meaning the actions cannot be displayed again. The remaining allegations, however, that “are based on the theory that Defendant [Valve] competes on a single integrated gaming platform and transactional marketplace,” it could go on.
As GameDiscoverCo points out, the decision is not a judgment on any of the claims in the lawsuit, it simply grants Wolfire an opportunity to plead his case, which is where things get very complex and very expensive. A recent decision in Epic v. Apple claiming that Apple is “not a monopolist” (and that it allows Apple to continue charging 30% fees on the App Store) might indicate that Wolfire has a tough road ahead, but at least it’s now shot.
I’ve reached out to Wolfire and Valve to comment on the decision and will update if I get a response.