The EU has fined PC gaming large Valve for antitrust practices on Steam

This photo image shows the Steam application on an iPhone.

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LONDON – European antitrust authorities have fined Valve and five other PC game companies a total of € 7.8 million (US $ 9.5 million) for a practice known as “geoblocking”.

Valve is best known as the creator of the popular PC game store Steam.

The European Commission, the EU’s executive branch, said Wednesday that Valve and other publishers had restricted video game sales based on users’ geographic location. Such practices violate EU competition law.

The Commission stated that these practices aim to maintain certain price differentials between Eastern and Western European countries and to prevent users from shopping in the EU internal market.

The publishers include the Japanese gaming giants Bandai Namco and Capcom, the American company ZeniMax, which owns the well-known game studio Bethesda Softworks, the French developer Focus Home and the German group Koch Media.

The fines for these publishers have been reduced to a total of € 6 million due to their collaboration with EU competition officials, the EU said. However, Valve was fined over € 1.6 million for refusing to work together.

“Today’s sanctions against the geo-blocking practices of Valve and five PC video game manufacturers are a reminder that EU competition law prohibits companies from contractually restricting cross-border sales,” said EU Competition Commissioner Margrethe Vestager in a statement.

“Such practices deprive European consumers of the benefits of the EU’s digital single market and the ability to search for the most appropriate offer in the EU.”

The valve was not immediately available for comment.

What did Valve do?

According to the EU, Valve allowed five well-known PC game manufacturers to sell geoblocked game codes for their distribution platform Steam.

“Users outside of a certain Member State were unable to activate a particular PC video game using Steam activation keys,” the Commission said.

Steam is a household name in PC gaming. It is the largest online marketplace for PC games and generates the most revenue for Valve, which is also known for critically acclaimed game series such as Half-Life and Portal.

Valve was founded in 1996 by former Microsoft employees Gabe Newell and Mike Harrington. The company has been privately owned since its inception.

According to the EU, Valve has bilateral agreements with all publishers mentioned to issue Steam keys that prevented the activation of certain games outside of 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 signed licensing and distribution agreements with clauses that restrict cross-border sales of games, the EU added. The block said these deals tended to last longer – between three and eleven years – and took place between March 2007 and November 2018.

According to the EU, the practices affected around 100 PC games.

Why does it matter?

Vestager, Europe’s best competition officer, made a name for herself as she competed against the USA’s greatest tech titans. Wednesday’s news suggests she is now turning to the massive video game sector.

According to the market research company Newzoo, the total games market should reach sales of 159.3 billion US dollars in 2020. The PC games market would represent $ 36.9 billion, or 23% of that revenue.

Video games have gotten a big boost from the coronavirus pandemic as people spend more time at home. According to a recent MarketWatch report, the global video game market was larger than the film industry and North American sports combined last year.

Recently, there has also been an increase in consolidation. Microsoft has bought Bethesda parent company ZeniMax – one of the companies fined by the EU – for $ 7.5 billion in cash. Bethesda is known for hit franchises like Fallout and The Elder Scrolls.

Microsoft wasn’t immediately available for comment on the EU fine when CNBC contacted him on Wednesday.

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