A judge has ruled that Wolfire's amended antitrust suit can move ahead.
(Image credit: Valve)
The antitrust lawsuit between Valve and Wolfire Games is back on track. The suit was dismissed in November 2021 for failing to meet necessary standards, but without prejudice, meaning Wolfire had 30 days to amend the complaint and refile it. Somewhat unexpectedly, that’s what it did, and a judge has now ruled that the case can move forward.
The original lawsuit contended that Valve uses its dominance of the PC gaming market through Steam to suppress competition, while extracting “an extraordinarily high cut from nearly every sale that passes through its store.” That keeps game prices artificially high, according to Wolfire, the indie developer of games including Lugaru and Overgrowth and originator of the Humble Bundle.
“In order to afford Valve’s 30 percent commission, game publishers must raise their prices to consumers and can afford to invest fewer resources in innovation and creation,” the lawsuit stated. “Gamers are injured by paying higher retail prices caused by Valve’s high commissions.”
And while the Epic Games Store has made previously unprecedented inroads into the digital PC market, it was actually cited as a failure in the suit because Epic was only able to do so by spending truckloads of cash on exclusive deals and giveaways.
Valve, naturally, defended its practices, saying its 30% cut “has become the ‘industry standard’,” and that it actually faces competition from some of the biggest companies in the business, including Microsoft, Epic, and Amazon. It also criticized Wolfire’s suit for a lack of specific claims: The claim that Valve forbids developers from selling discounted Steam keys through other distributors, for instance, arose from “a single anecdote” involving one unnamed developer, Valve said. The judge in the case apparently agreed with that assessment, saying in the dismissal that the lawsuit “does not articulate sufficient facts to plausibly allege an antitrust injury.”
The updated suit was enough to at least partially fill in those blanks. A ruling filed on May 9 and available via GameDiscoverCo noted that the amended filing doesn’t make any new claims, but instead “provides additional context” to the original allegations. One such example is a note about Valve’s acquisition of the World Opponent Network [WON] in 2001, which it shut down a few years later, “forcing gamers onto the Steam platform.”
“This denotes market power earlier on than described in the CAC [class action complaint],” the ruling states. “And while both complaints indicate that, in those early days, Defendant was competing against brick-and-mortar game distributors, the SAC [second amended class action complaint] makes it clear that Defendant did not need market power to charge a fee well above its cost structure because those brick-and-mortar competitors had a far higher cost structure.”
It’s not a clear-cut win for Wolfire. Four causes of action in the lawsuit, resting on the claim that the Steam platform and Steam storefront operate in separate markets, were dismissed, as was part of the seventh cause of action—and with prejudice this time, meaning the claims cannot be filed again. The remaining claims, however, which “rest on the theory that Defendant [Valve] competes in a single, integrated game platform and transaction market,” will be allowed to proceed.
As GameDiscoverCo points out, the ruling isn’t a judgment on any of the lawsuit’s claims, it simply grants Wolfire an opportunity to make its case, which is where things get both very complex and very expensive. A recent ruling in the Epic v. Apple case stating that Apple is “not a monopolist” (and that allows Apple to continue charging 30% fees on the App Store) could indicate that Wolfire has a tough road ahead, but at least now it’s got a shot.
I’ve reached out to Wolfire and Valve for comment on the ruling, and will update if I receive a reply.