Valve has issued a scathing response to Wolfire’s April lawsuit alleging anticompetitive monopoly practices on the Steam storefront. In that response, Valve argues that the suit should be dismissed because it “fails to allege the most basic elements of an antitrust case.”
There’s no right to free Steam keys
Wolfire’s case centers in part on the fact that Valve requires free Steam Keys generated by developers using Valve’s platform to be sold on other platforms at prices no lower than those offered on Steam. But Valve argues multiple times in its filing that it has “no obligation to distribute Steam Keys, let alone to allow developers to use Steam Keys to undercut their Steam prices in other stores.”
The free key system, Valve says, is intended as a way to “[give] developers a free way to sell (or give away) a reasonable number of copies of their Steam-enabled games.” With that in mind, restrictions on off-Steam pricing for those keys “prevents developers from free-riding on Valve’s investment in Steam.” The pricing and quantity guidelines “prevent developers from eroding large quantities of sales on Steam, which Valve bears 100% of the expense of creating and maintaining, yet provides to users for free.”
Valve goes on to say that the antitrust laws impose “no obligation on Valve to facilitate competition with itself” and points to supporting case-law to that effect. “Nor does Valve have a duty to continue offering [free keys], to grant them in unlimited numbers, or allow developers to use them to sell Steam-enabled games in other stores cheaper than on Steam,” Valve argues.
Wolfire’s lawsuit also alleges that Valve tries to enforce pricing parity not just for generated Steam keys but for non-Steam versions sold on other platforms. Valve, in its response, is not impressed with the factual basis for this allegation, which it says is tied to “a single anecdote of Valve allegedly telling one unnamed developer it shouldn’t give a non-Steam-enabled game free on Discord’s competing platform if it charges Steam users $5 for the Steam-enabled version of that game on Steam.” That narrow anecdote, Valve argues, “fails to allege market-wide enforcement or plausibly lead to any effect on competition.”
Wolfire’s suit does present evidence that many games are priced at the same level on Steam and other storefronts that charge lower fees. But Valve argues that this kind of pricing parity across storefronts is commonplace. Even if it wasn’t, Valve says, the lawsuit is missing “any factual allegation that Valve… did anything at all to affect, let alone coerce, the developers to sell at the same prices in two stores.”
Valve also takes Wolfire to task for not presenting any facts to back up its assertion that Steam’s 30 percent base cut for game sales is higher than what would be available in a more “competitive” market. Instead, Valve says, “Plaintiffs can muster only a generalization that economics predicts Valve’s 30 percent commission should have decreased over time.”
Valve points out that it hasn’t increased its base fee since “Steam’s beginning when it had zero market share, and hence no power to charge anything but a competitive price.” On the contrary, in 2018, Steam reduced its fees for high-earning games, a move the company suggests “lay[s] out the opposite of a supracompetitive commission.”
Here, Valve points to a 2008 antitrust case against Apple and its iPod/iTunes markets for music. In that case, Apple successfully pointed out that it had maintained the same 99 cent cost per song “both before and after it obtained a monopoly—and never changed that price, even after a large seller (Amazon) entered the market.”
The fact that Steam’s 30 percent fee is higher than that of competitors like the Epic Games Store is a reflection that “the market allegedly regards Steam as superior… which is consistent with Valve’s ability to fairly command higher prices,” Valve says. In support of this, Valve cites lines from Wolfire’s own suit describing consumer backlash when Borderlands 3 was not available on Steam.
“The Steam platform is far more than a middleman but offers real value to gamers and developers,” Valve writes. “Indeed, gamers allegedly prize Steam so much that Epic’s offering popular games exclusively on its Epic Games Store platform ’caused backlash’ and ‘calls for boycotts’ from gamers forced to ‘wait for a Steam-enabled release or use a PC Desktop Gaming Platform they do not prefer.'”