In this photo illustration, the Steam app shown on an iPhone.
Guillaume Payen | SOPA Pictures | LightRocket using Getty Images
LONDON – European antitrust regulators have fined Valve and five other PC game publishers a total of 7.8 million euros ($ 9.5 million) for a practice known as “geo-blocking”.
Valve is best known as the creator of the popular PC game store Steam.
The European Commission, the EU’s executive arm, said on Wednesday that Valve and other publishers were restricting video game sales based on users’ geographical location. These practices infringe Community competition law.
The Commission said these practices were aimed at maintaining certain price differences between East and West countries and preventing users from making purchases in the EU single market.
Publishers include Japanese gaming giants Bandai Namco and Capcom, US firm ZeniMax, which owns the well-known gaming studio Bethesda Softworks, French developer Focus Home and German group Koch Media.
Fines for these publishers were reduced to a total of 6 million euros due to their cooperation with EU competition officials, the EU said. However, Valve received a fine of more than 1.6 million euros for refusing to cooperate.
“Today’s sanctions against Valve’s ‘geo-blocking’ practices and five PC video game publishers serve as a reminder that, under EU competition law, companies are prohibited from contractually restricting cross-border sales,” said EU Competition Commissioner Margrethe Vestager in a statement. .
“These practices deprive European consumers of the benefits of the EU’s digital single market and the opportunity to look for the most suitable offer in the EU.”
Valve was not immediately available for comment.
What did Valve do?
According to the EU, Valve allowed five leading PC game publishers to distribute geographically locked game codes for their Steam distribution platform.
“Users outside a designated Member State were prevented from activating a particular PC video game with Steam activation keys,” the commission said.
Steam is a well-known name for PC games. It is the largest online marketplace for PC games and generates more revenue for Valve, which is also known for the highly acclaimed game series like 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.
The EU says Valve has reached bilateral agreements with all publishers designated to issue Steam keys that would prevent the activation of certain games outside the Czech Republic, Poland, Hungary, Romania, Slovakia, Estonia, Latvia and Lithuania. These internships 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 formed licensing and distribution agreements with clauses restricting the cross-border sale of games, the EU added. The blog said these agreements used to last longer (between three and eleven years) and took place between March 2007 and November 2018.
According to the EU, the practices concerned approximately 100 PC games.
Why is it important?
Vestager, the top European head of competition, has become famous for taking on the biggest tech titans in the United States. Wednesday’s news suggests he is now turning his attention to the massive video game industry.
According to market research firm Newzoo, the entire gaming market was expected to generate revenue of $ 159.3 billion by 2020. The PC gaming market would account for $ 36.9 billion, or 23%, of these income.
Video games have received a big boost from the coronavirus pandemic as people spend more of their free time at home. According to a recent MarketWatch report, the global video game market was larger than the U.S. film and sports combined industry last year.
Recently, consolidation has also increased, as Microsoft bought Bethesda’s parent company, ZeniMax, one of the companies fined by the EU, for $ 7.5 billion in cash. Bethesda is known for successful gaming franchises such as Fallout and The Elder Scrolls.
Microsoft was not immediately available to comment on the EU fine when CNBC contacted it on Wednesday.