As Epic v. Apple enters the courtroom, Valve is being sued over Steam too

We’re discovering that gaming giant Valve is facing litigation over its own 30% cut and alleged anticompetitive practises for its PC gaming platform Steam, just two days before Apple is dragged into a California court to explain its 30% App Store charge — just two days after Microsoft axed its 30% cut on PC.

In a lawsuit filed Tuesday, independent game developer and Humble Bundle maker Wolfire Games claims that Valve exploits its market power to force game developers to sell most of their games via the Steam Store, where they are subject to Valve’s 30% toll (via Ars Technica).

Similar to Epic v. Apple, the current suit claims that a platform owner is abusing its powerful monopoly over the place where people run their apps (there, iOS; here, Steam) to control and tax an entirely different industry (alternative app/game stores), an industry that could potentially thrive and lower costs for customers if not for (Apple / Valve’s) iron grip.

Valve, according to Wolfire, now dominates “about 75%” of the entire PC gaming industry, raking in an estimated $6 billion in annual sales from that 30% fee alone — over $15 million a year per Valve employee, assuming the company still has somewhere around the 360 employees it confirmed having five years ago.

There’s a laundry list of complaints about Valve exploiting its control, which you can read in full (which is why I’ve embedded the complaint below), but the points seem to boil down to:

• Even though many of them gave developers a larger cut of the pie, such as the Epic Game Store’s 88 percent sales share, every other company’s effort to compete with Steam has failed to make a dent.
• Publishers are unable to sell PC games and game keys for less money on Steam.

• As a result, competing game platforms are unable to compete on price, preventing them from gaining traction.
• The majority of those competing game stores have given up, similar to how EA and Microsoft have both taken their games back to Steam.
• Since businesses that might have been rivals are limited to merely feeding the Steam engine with their games or selling Steam keys, Steam remains the dominant medium.

Whether or not these plaintiffs succeed in their case against Valve, pressure is mounting on the industry to minimize app store fees, and Valve will have a tougher time justifying them than others — it appears to be more dominant in the PC gaming space than either Apple or Google is in the smartphone space, despite the fact that there are far fewer PC gamers than smartphone users.

The lawsuit claims that “publishers were more and more reluctant to participate in Humble Bundle events, decreasing the quantity and quality of products available to Humble Bundle customers,” because they feared retaliation if Humble Bundle buyers resold their Steam keys on the grey market for cheap — and Wolfire claims that the Humble Bundle, in particular, has been a victim of Valve’s activities.

So far, Valve hasn’t made any significant concessions to game developers. Valve changed its revenue split in 2018 to give bigger businesses more money, reducing the 30% reduction to 25% after a developer makes $10 million in revenues, and to 20% after they reach $50 million. (Apple and Google reduce their cuts to 15% for developers with less than $1 million in revenue, ostensibly supporting smaller developers rather than larger ones.) But the Epic Games Store only takes 12%, and Microsoft’s Windows Store only followed suit by lowering its 30% cut to 12%.

Beyond the simple matter of price, the lawsuit doesn’t waste any ink on why gamers would prefer Steam to the likes of EA’s Origin or Microsoft’s Windows Store; I’d say most Steam competitors have been quite deficient when it comes to addressing PC gamers’ many wants and needs. But, even though these allegations are valid, it doesn’t justify Valve’s anticompetitive conduct.