In this photo illustration, the Steam app seen on an iPhone.
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LONDON – European antitrust regulators fined Valve and five other PC game publishers a total of 7.8 million euros ($ 9.5 million) for a practice known as “geographic blocking”.
Valve is best known as the creator of the popular Steam PC game store.
The European Commission, the EU’s executive arm, said on Wednesday that Valve and other publishers had restricted video game sales based on users’ geographic location. These practices violate EU competition law.
The Commission said that these practices were aimed at maintaining certain price differences between Eastern and Western European countries and preventing users from making purchases in the EU’s single market.
Publishers include Japanese gaming giants Bandai Namco and Capcom, the American company ZeniMax – which owns the well-known gaming studio Bethesda Softworks – the French developer Focus Home and the German group Koch Media.
Fines for these publishers have been reduced to a total of € 6 million due to cooperation with EU competition authorities, the EU said. However, Valve was fined more than 1.6 million euros for refusing to cooperate.
“Today’s sanctions against the practices of ‘geo-blocking’ by Valve and five PC video game publishers serve as a reminder that under EU competition law, companies are prohibited from contractually restricting international sales,” EU competition commissioner Margrethe Vestager said in a statement.
“Such practices deprive European consumers of the benefits of the EU’s Digital Single Market and the opportunity to research the most suitable offer in the EU.”
Valve was not immediately available for comment.
What did Valve do?
According to the EU, Valve has allowed five major PC game publishers to distribute geo-blocked game codes to its Steam distribution platform.
“Users located outside a specific Member State have been prevented from activating a particular PC video game with Steam activation keys,” said the Commission.
Steam is a household name in PC games. It is the largest online market for PC games and generates the highest revenue for Valve, which is also known for highly acclaimed game series like Half-Life and Portal.
Valve was founded in 1996 by former Microsoft employees Gabe Newell and Mike Harrington. The company has been a private company since its inception.
The EU says Valve has made bilateral agreements with all publishers appointed to issue Steam keys that prevented the activation of certain games outside the Czech Republic, Poland, Hungary, Romania, Slovakia, Estonia, Latvia and Lithuania. These practices last between one and five years and were implemented between September 2010 and October 2015, according to the Commission.
Meanwhile, Bandai Namco, Focus Home, Koch Media and ZeniMax have entered into licensing and distribution agreements with clauses that restrict international game sales, the EU added. The bloc said that these deals tend to last longer – between three and 11 years – and occurred between March 2007 and November 2018.
The practices involved around 100 PC games, according to the EU.
Why does it matter?
Vestager, Europe’s leading competitor, has made a name for itself against the biggest titans of technology in the United States. Wednesday’s news suggests that it is now turning its attention to the huge video game industry.
The entire gaming market was expected to generate revenues of $ 159.3 billion in 2020, according to market research firm Newzoo. The PC gaming market would account for $ 36.9 billion, or 23%, of that revenue.
Video games have had a big boost with the coronavirus pandemic, as people are spending more leisure time at home. The global video game market was bigger than the film industry and American sports combined last year, according to a recent report by MarketWatch.
It also saw growing consolidation recently, with the purchase of Microsoft ZeniMax, the parent company of Bethesda – one of the companies fined by the EU – for $ 7.5 billion in cash. Bethesda is known for successful game franchises like Fallout and The Elder Scrolls.
Microsoft was not immediately available to comment on the EU fine when contacted by CNBC on Wednesday.