A class action lawsuit was filed in the federal court in Calfornia last week against Valve and several game developers, claiming that Valve “abuses the market power of the Steam platform” to prevent other game distribution platforms, such as Epic Games Store and Microsoft store, competing in price.
As reported by The Hollywood Reporter, the lawsuit relates specifically to a ‘Most Favored Nations’ clause that Valve makes developers agree to in the Steam Distribution Agreement. Basically, the developers who are launching their game agree that the Steam launch will be set at the same price as the game is offered on other platforms.
The suit states that “The ability to provide PC games to consumers at lower prices is a way for a company or a new competitor to gain market share. If that market functioned properly, that is, if Steam MFN did not exist and the platforms were able to compete in price – platforms that compete with Steam would be able to provide the same (or higher) margins to game developers and, at the same time, offer lower prices to consumers. “
The five plaintiffs claim that they have been “forced to pay supra-competitive prices” due to the Most Favored Nations provision.
Together with Valve, the lawsuit names several game developers who signed the Steam Distribution Agreement as defendants, including CD Projekt, Ubisoft, kChamp Games, Rust LLC and Devolver Digital. I asked for a comment from Valve and will update this post if they respond.
The price of games is not entirely dictated by the operator of each platform, but defined by the game developers and publishers themselves – albeit in partnership with the operator of the platform. Removing the ‘Most Favored Nations’ clause from Valve’s developer deals would not automatically mean cheaper prices at other stores. Even with Epic having a smaller reduction in sales, developers can simply decide to keep the profit, instead of passing the savings on to the consumer.
That said, it would put the choice in the hands of the developers rather than Valve, and would allow Epic and other platform operators to offer lower price incentives to developers. It’s not hard to imagine Epic paying developers to encourage them to sell their cheapest games on the Epic Games Store, as much as they currently pay to offer free and exclusive games.
You can read the full complaint on The Hollywood Reporter.