Valve and Sony Sued for Establishing Digital Monopolies with Their Stores

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Both Valve and Sony have been sued for establishing monopolies with their digital stores, respectively Steam on PC and PlayStation Store on Sony's consoles. This comes in the middle of the ongoing Epic v. Apple trial, where Epic is trying to prove that Apple does the same with its App Store.

Let's begin with Valve's class action, which was filed by Wolfire Games on April 27th in the US District Court for the Western District of Washington. A couple of days ago, Wolfire CEO David Rosen wrote a detailed letter to reveal exactly why he is joining the lawsuit. In short, he believes Valve is using its dominant position to enforce game developers to sell their titles for the same price on Steam and any other competing store, threatening to remove the game from Steam if a developer opts to sell it for a lower price on, say, the Epic Games Store or even their own store.

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I felt that I had no choice, because I believe gamers and game developers are being harmed by Valve's conduct. [...] I did not set out with the goal of suing Valve, but I have personally experienced the conduct described in the complaint. When new video game stores were opening that charged much lower commissions than Valve, I decided that I would provide my game "Overgrowth" at a lower price to take advantage of the lower commission rates. I intended to write a blog post about the results.

But when I asked Valve about this plan, they replied that they would remove Overgrowth from Steam if I allowed it to be sold at a lower price anywhere, even from my own website without Steam keys and without Steam’s DRM. This would make it impossible for me, or any game developer, to determine whether or not Steam is earning their commission. I believe that other developers who charged lower prices on other stores have been contacted by Valve, telling them that their games will be removed from Steam if they did not raise their prices on competing stores.

While talking to other developers about problems that they were having with Steam, they kept referring to it as a "monopoly," and saying that there was nothing that we could do. I wondered, has anyone actually checked if Valve is obeying antitrust law? So I consulted with legal experts, which eventually culminated in the complaint.

As the dominant platform, when developers list their games on multiple PC stores, the majority of their sales will come through Steam. I believe this makes most developers afraid that if they don't sell on Steam, they will lose the majority of their revenue. To those developers, avoiding Steam would add unacceptable risk to the already high risk of game development in general. I believe that most developers have little or no choice but to sell on Steam and do as they're told by Valve. [...]

I believe that Valve is taking away gamers' freedom to choose how much extra they are willing to pay to use their platform. I believe they are taking away competing stores' freedom to compete by taking advantage of their lower commission rates. I believe they are taking away developers' freedom to use different pricing models.

In my opinion, this is part of why all competing stores have failed. This suit insists that Valve stop interfering with pricing on other stores, and allow gamers and developers to make their own decisions. That’s why I joined the lawsuit.

Sony's class action, on the other hand, was filed directly by an individual, Agustin Caccari, on May 5th in the US District Court for the Northern District of California (San Francisco Division). In this case, the consumer is lamenting that a little over two years ago Sony removed the ability for other retailers like Amazon, GameStop, or Best Buy to directly sell digital codes for PlayStation games, which led to 'supracompetitive prices' for digital PlayStation games as they can only be acquired through the PlayStation Store now.

On April 1, 2019, Sony eliminated retailers’ ability to sell download codes for digital PlayStation games. Because delivering digital content to PlayStation consoles requires access to Sony’s PlayStation Network, the new policy established the PlayStation Store as the only source from which consumers can purchase digital PlayStation games and the only source to which video game publishers can sell digital PlayStation games. Sony also requires publishers who sell digital games on the PlayStation Store to relinquish full control over the retail price. As a result, the policy swiftly and effectively foreclosed any and all price competition in the retail market for digital PlayStation games.

Sony’s new restrictions established a monopoly over the sale of digital PlayStation games. Sony’s monopoly allows it to charge supracompetitive prices for digital PlayStation games, which are significantly higher than their physical counterparts sold in a competitive retail market, and significantly higher than they would be in a competitive retail market for digital games.

Whether either of these lawsuits will get anywhere is presently unclear, but it does seem that the tide is turning against digital store monopolies, which should be a net bonus for consumers.

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