Examples:

• • Melissa, an Oregon gamer, bought a new indie RPG through Steam, putting her in the nationwide plaintiff class.
  • Carlos purchased a weapon skin in his favorite FPS using his Steam Wallet, an example of Steam’s in-game payment processing.
  • Jenny, a LA resident, pre-ordered a major title on Steam, making her part of both the national class and California subclass.
  • GoGo Games used Steam to digitally distribute their new puzzle platformer, participating in the PC game distribution market.
  • Tomoe bought a Japanese visual novel only available in the US through Steam, illustrating the relevant geographic market.

Key Takeaways:

• • Valve’s Steam platform is at the center of the case, with its role in PC game distribution and in-game payments being scrutinized.
  • Any Steam user in the U.S. who bought PC games or made in-game purchases may be part of the proposed plaintiff classes.
  • The lawsuit alleges two relevant product markets impacted by Valve’s conduct: 1) PC game distribution and 2) PC in-game payment processing.
  • While Valve serves a global userbase, the case focuses on effects in the U.S. market, the key geographic market for this action.
  • Defining the relevant markets is crucial, as plaintiffs must show Valve has market power in a properly defined antitrust market.

FAQs:

• • Are console or mobile games part of the relevant markets too? No, plaintiffs allege the relevant markets are limited to PC games, as they provide distinct user experiences not reasonably interchangeable with console/mobile games.
  • Can only U.S. residents be part of the plaintiff class? The class definitions include U.S. purchases, so while anyone globally could be affected, this case focuses on domestic impact.
  • Why is the payment processing market separate from game distribution? In-game purchases are add-on content separate from the base game, so there’s a distinct market for services enabling those transactions.
  • Are game developers also plaintiffs in this lawsuit? No, this case is brought on behalf of consumer purchasers, not game publishers. However, the allegedly anticompetitive effects impact both groups.
  • What if the court fails to agree with plaintiffs’ market definitions? If the relevant markets are defined differently than plaintiffs propose, it could significantly impact their ability to prove market power and anticompetitive effects.

Examples:

• • FunGames couldn’t offer a lower launch price on the Epic Store due to Steam’s PMFN, even though Epic only takes a 12% cut vs. Steam’s 30%.
  • StellarPlay wanted to use a cheaper payment processor for in-game transactions, but Steam’s terms forced them to only use Valve’s system.
  • After offering a steep discount on their own website, InovaGaming found their new title buried in Steam search results – alleged retaliation by Valve.
  • AAA publisher VentureSoft was considering pulling titles from Steam, but decided against it after Valve offered them substantial discounts on fees.
  • Steam rejected SkyHigh Studio’s proposed $14.99 launch price, instead “recommending” $24.99 to match other similar games on the platform.

Key Takeaways:

• • The PMFN is key – it allegedly prevents publishers from offering lower prices on competing platforms, even if they charge lower fees than Valve’s 30% commission.
  • By forcing use of its own payment system for in-game purchases, Valve ties two separate products and further restrains competition in the payment processing market.
  • Valve allegedly wields its market power to punish publishers who don’t abide by its restrictive terms, making them think twice about promoting competition.
  • While price competition from large publishers could threaten Steam’s dominance, Valve’s special incentives to big studios keeps them in line.
  • Even Valve’s subtle pricing guidance and restrictions on price changes could serve to coordinate and inflate prices market-wide.

FAQs:

• • Doesn’t Valve have the right to dictate terms for its own platform? There are limits on what dominant firms can do. Overly restrictive terms that substantially harm competition may be illegal.
  • How do we know Valve actually enforces this alleged PMFN? Valve’s own statements and actions towards “disloyal” publishers suggest the PMFN is more than just hypothetical. The lawsuit cites specific examples.
  • Is it really illegal to tie two products/services together? Tying can be anticompetitive if: 1) There’s separate demand for the tied products; 2) The seller has market power; and 3) It affects a substantial amount of commerce. Plaintiffs argue Valve’s tie meets this test.
  • Does Valve actually retaliate against publishers or is that speculation? While some details are limited pre-discovery, the complaint points to actions like making specific titles harder to find that suggest retaliation.
  • What’s wrong with giving big publisher discounts if it means more games on Steam? If discounts are selectively used to keep large studios from competing against Steam, that could help maintain Valve’s alleged monopoly power.

Examples:

• • With 75%+ share of PC game distribution, Valve likely has monopoly power, and the PMFN may be anticompetitive maintenance of that power.
  • To prove monopolization, plaintiffs must show: 1) Steam is a monopoly in PC game distribution; 2) Valve willfully maintained that through the PMFN etc.; 3) Gamers were injured as a result.
  • Valve’s 75%+ market share is probably sufficient to infer monopoly power, but plaintiffs may also show direct proof like supracompetitive prices.
  • Even if Valve doesn’t quite have monopoly power, its actions may still constitute attempted monopol
  • By forcing publishers to use Valve’s payment system for in-game purchases as a condition of selling on Steam, Valve may be illegally tying two separate products.

Key Takeaways:

• • Valve faces serious claims under the Sherman Act, the main federal antitrust statute prohibiting monopolistic conduct and restraints of trade.
  • Plaintiffs’ core claim is monopolization under § 2 – that Valve has willfully maintained a monopoly through anticompetitive practices like the PMFN and retaliating against publishers.
  • Valve’s high market share alone isn’t illegal, but using that monopoly power to exclude rivals and impede competition is. That’s the key question.
  • The attempted monopolization claims lower the bar – Valve may be liable if it tried to monopolize the markets through anticompetitive acts, even if it hasn’t quite succeeded yet.
  • Separately, tying in-game payment processing to Steam distribution may be per se illegal under § 1 if Valve has enough market power in the “tying” distribution market.

FAQs:

• • Monopolization and attempted monopolization differences? Monopolization requires a firm to already have monopoly power, while attempted monopolization covers anticompetitive acts seeking to build a monopoly.
  • Is a high market share automatically illegal? No – it’s legal to gain a monopoly through legitimate competition and superior business. But using that monopoly to unfairly impede rivals crosses the line.
  • What type of conduct counts as monopolistic exclusion? Exclusionary acts lack legitimate business justification and function to impair rivals. Plaintiffs argue Valve’s PMFN and retaliatory practices fit the bill.
  • Why are tying claims often evaluated under the per se rule? Certain restraints, like tying by firms with market power, are deemed so likely to be anticompetitive that they’re presumed illegal without detailed analysis of effects.
  • Antitrust rule of reason and per se rules differences? Rule of reason weighs all circumstances to see if a restraint is net anticompetitive. Per se rules apply a strong presumption of illegality to certain disfavored restraints.

Examples:

• • Game prices incorporate Valve’s 30% fee, so Simon, a frequent Steam user, has likely paid inflated prices on many purchases due to the alleged monopoly overcharge.
  • Unwilling to risk Valve’s retaliation, Nancy’s favorite indie studio decided not to launch their new game on GOG despite the lower fees, depriving her of that option.
  • Doug bought $20 worth of in-game currency for his go-to MMO, but $6 of that went to Valve’s supracompetitive fee instead of the game developers.
  • Amy hesitated to save her payment info on Steam after the data breach, but she has no other choice if she wants to keep playing her library of Steam games.
  • Jackson would buy more games if the prices were lower, but inflated commissions make him more selective, exemplifying reduced output in the market.

Key Takeaways:

• • Higher prices are a classic antitrust injury – plaintiffs argue Valve’s 30% fee, which is passed on to consumers, far exceeds what it could charge in a competitive market.
  • Competition breeds innovation and quality, as firms strive to win consumers. Valve allegedly uses market power to avoid this, to gamers’ detriment.
  • Practices like the PMFN and retaliation against “disloyal” publishers make it difficult for rival platforms to challenge Steam, even if they offer lower fees or better terms.
  • With Steam facing little competitive pressure, gamers are essentially locked into a dominant platform, reducing their choices and ability to vote with their dollars.
  • Monopoly overcharges and lack of alternatives can depress the amount of games purchased overall compared to a market with healthy price and quality competition.

FAQs:

• • Is there direct proof that Valve’s 30% fee is supracompetitive? Plaintiffs point to rival platforms operating profitably with much lower fees as evidence that Valve’s rate is far above cost.
  • But don’t some consumers prefer Steam’s interface and features? While some may favor Steam all else equal, that doesn’t prove Valve isn’t insulated from competition on things like price and quality.
  • Is it really Valve’s fault if rivals can’t compete? It can be if that failure is due to Valve’s allegedly anticompetitive restraints rather than Valve simply offering a better product.
  • Won’t game developers just keep the savings if Valve’s fee is lower? Assuming a competitive market, rivalry between developers would incentivize passing on cost savings to consumers.
  • Any proof that lower prices would lead to people buying more games? Economic theory and evidence suggest lower prices expand output, as more gamers buy and existing gamers buy more.

Examples:

• • Valve may argue Tim still bought a game on the Epic store, showing robust competition, even if Steam’s policies deterred a simultaneous Steam purchase.
  • Valve may claim its rules against undercutting prices on rival platforms are reasonable ways to prevent free-riding off its investments in Steam.
  • If Sandra would have paid the same price even without the PMFN because publishers set uniform prices, Valve may question if she has antitrust injury.
  • Valve could argue its 30% cut funds an integrated, secure platform that ultimately benefits both gamers like Kevin and the publishers who sell to them.
  • Pointing to gamers like Amy who also use consoles and the Epic store, Valve may contend for a broader market definition to refute monopoly power.

Key Takeaways:

• • Valve will likely argue for a broader market definition (including consoles and beyond just PC games) to dispute its alleged monopoly power.
  • Expect Valve to contend its policies around pricing and payment processing on Steam are normal, lawful business practices to protect its platform investment.
  • Any plausible argument that Valve’s rules serve legitimate, procompetitive ends (like security) may help rebut claims of anticompetitive conduct.
  • Valve may put plaintiffs to their proof on whether its specific conduct caused the claimed antitrust injuries and seek to poke holes in that causal chain.
  • While plaintiffs have theories for why consumers have standing, Valve could argue any harm is more directly to game publishers who contract with Valve.

FAQs:

• • Is the existence of some limited competition enough to negate monopoly power? Not necessarily – monopoly power is about price control ability or competition exclusion, not the total absence of rivals.
  • Could the PMFN actually be good for competition? Valve may argue it prevents free-riding and encourages investment, but the net effect on competition is hotly disputed.
  • Is a 30% commission inherently anticompetitive? Not if it arose from competition on the merits. Plaintiffs must tie it to exclusionary conduct to prove their case.
  • What if some consumers prefer Steam’s integrated platform despite the higher costs? Valve may argue that shows its system has benefits, but plaintiffs can still try to show net harm to competition.
  • Can Valve blame any price inflation on the publishers’ choices? Quite possibly – expect dispute over whether Valve’s policies or independent publisher decisions drive any proven overcharges.

Questions: Claims & Allegations

• • 1. What are the two main markets at issue in the lawsuit?
    • A) PC & console game distribution
    • B) PC game distribution & PC in-game payment processing
    • C) Digital & physical game distribution
    • D) US & worldwide game distribution
  • 2. What is the “PMFN” that plaintiffs claim is anticompetitive?
    • A) Valve’s internal pricing algorithm
    • B) A secret agreement between online game distributors
    • C) A policy requiring equal or higher prices on rival platforms
    • D) A deal between Valve and major game publishers
  • 3. What’s the main federal law at issue in the case?
    • A) The Carnival Act
    • B) The Sherman Act
    • C) The National Peace Commission Act
    • D) The Masterson-Wilson Act
  • 4. Which is NOT an alleged anticompetitive effect in the complaint?
    • A) Higher game prices from Valve’s 30% fee
    • B) Reduced incentive for Valve to innovate Steam
    • C) Fewer AAA game titles available to consumers
    • D) Limited consumer choice between PC game platforms
  • 5. What type of antitrust claim is Valve’s requirement to use Steam Wallet for in-game purchases?
    • A) Exclusionary conduct
    • B) Predatory pricing
    • C) Refusal to deal
    • D) Tying arrangement

Answers: Claims & Allegations

• • 1. B) The complaint alleges Valve is monopolizing the PC game distribution market and PC in-game payment processing market. Mobile and console are separate.
  • 2. C) The Platform Most-Favored-Nations policy allegedly requires game publishers to sell games on rival PC platforms at the same or higher prices as on Steam.
  • 3. B) The Sherman Antitrust Act of 1890 is the main federal law prohibiting anticompetitive monopolization and trade restraints.
  • 4. C) The case focuses more on price and innovation impacts of Valve’s alleged practices, rather than the selection of titles available.
  • 5. D) Forcing publishers and gamers to use Valve’s Steam Wallet payment processing for in-game purchases as a condition of distributing through Steam may constitute an illegal tie.

Questions: Legal Concepts & Standards

• • 1. What market share is generally required to infer monopoly power?
    • A) 30%+
    • B) 50%+
    • C) 70%+
    • D) 90%+
  • 2. What’s the key difference between monopolization and attempted monopolization claims?
    • A) Only monopolization requires market power
    • B) Attempted monopolization requires specific intent
    • C) Monopolization applies only to unilateral conduct
    • D) Attempted monopolization doesn’t require antitrust injury
  • 3. Courts often define the relevant product market using which test?
    • A) Consumer surveys
    • B) Number of competitors
    • C) Reasonable interchangeability
    • D) Total sales revenue
  • 4. A typical defense to antitrust claims is NOT?
    • A) Lack of market power
    • B) Conduct is actually procompetitive
    • C) Plaintiffs lack antitrust injury
    • D) Necessity of the restraint
  • 5. What must plaintiffs show to prove an illegal tying arrangement?
    • A) Two products, market power, coercion, foreclosure of commerce
    • B) Three products, pricing below cost, intent to monopolize
    • C) Conspiracy between two or more companies, restraint of trade
    • D) Exclusive dealing contracts, substantial foreclosure, lack of any procompetitive rationale

Answers: Legal Concepts & Standards

• • 1. C) 70%+ market share is often sufficient to infer monopoly power, though the number isn’t a rigid cutoff and other factors matter too.
  • 2. B) Attempted monopolization requires showing the defendant had a specific intent to monopolize, while monopolization just requires general intent.
  • 3. C) Courts often look at whether products are reasonably interchangeable in consumers’ eyes to define the relevant product market.
  • 4. D) Arguing a restraint is necessary isn’t itself an antitrust defense – defendants typically assert lack of market power, procompetitive benefits, or lack of injury.
  • 5. A) Illegal tying requires: 1) Two separate products; 2) Seller has market power in tying product; 3) Seller forces buyers to take tied product; and 4) Arrangement forecloses substantial commerce.