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Steam's U.S. antitrust lawsuits fail to get dismissed - now what?

"Convince me" - the judge, probably.

[The GameDiscoverCo game discovery newsletter is written by ‘how people find your game’ expert & company founder Simon Carless, and is a regular look at how people discover and buy video games in the 2020s.]

Welcome to the week as we see it, folks. And it’s another busy one, headed by some interesting new filings in a couple of U.S. lawsuits targeting Steam creator Valve. Where could those be going? We don’t know, but we’ll speculate..

Valve vs. Wolfire & Dark Catt - what happens now?

Illustration from Gilbert & Sullivan’s ‘Trial By Jury’
Illustration from Gilbert & Sullivan’s ‘Trial By Jury’ - may not be 100% accurate.

So, the path to ‘justice’ is slow and tortuous. And as of late last week, the ‘motion to dismiss’ in two U.S. antitrust cases involving Valve and Steam have been denied. This mean that the suits may continue to the next stage, discovery.

Specifically, if you look at the latest filings in Wolfire Games vs. Valve Corporation, you’ll discover the May 6th filing [.PDF], with 81-year old (!) Washington State District Judge Coughenour ruling that Valve’s attempt to get the case thrown out is only partially successful.

This may be confusing to some of you, because there were headlines back in November 2021 that Wolfire’s case had failed. But as Ars Technica noted, Wolfire “had 30 days to amend its complaint to address the criticisms and absences of facts brought up in this dismissal.” Which they did, and managed to get some of its claims to the next stage.

The original lawsuit brought by Overgrowth dev Wolfire was explained by David Rosen as follows: “Once a company reaches a certain level of power over an entire market, the antitrust laws forbid those companies from distorting competition. I believe that Valve is taking away gamers' freedom to choose how much extra they are willing to pay to use their platform. I believe they are taking away competing stores' freedom to compete by taking advantage of their lower commission rates. I believe they are taking away developers' freedom to use different pricing models.”

In their arguments, Wolfire’s lawyers threw the kitchen sink at Valve - as is common. However, the legal argument and results mainly split into three parts:

  • Wolfire claimed that “the Steam Platform and Steam Store operate in separate markets”, and therefore it should be possible/permitted to use the platform without using the actual store purchasing mechanisms. The court again rejected this and all related claims, noting that the store part is how you pay for the underlying platform. It doesn’t make practical sense for them to be split.
  • Additionally, it was claimed that Valve is enforcing pricing parity. The claim? “[Valve] imposes a [platform most-favored nation] regime to non-Steam-enabled games to ‘prevent price competition from rival storefronts’”. Now, the court acknowledges the more detailed claim that “a Steam account manager informed Plaintiff Wolfire that ‘it would delist any games available for sale at a lower price elsewhere, whether or not using Steam keys.’” And it wants to see if there’s more alleged evidence like that. So that claim can go to the next phase.
  • Finally, here’s a weird one - did Valve have ‘market power’ at the time it started up Steam and set its 30% platform cut? The extra info is as follows: “Defendant acquired the World Opponent Network gaming platform in 2001 and shut it down a few years later, forcing gamers onto the Steam Platform, making Steam ‘instantly… a must-have platform’.” Debatable, but it was a clever enough legal argument that the judge wants to see more.

Additionally, the lawsuit from Dark Catt Studios - the company who got a game banned from Steam before filing it - also got an update waving it through, since it alleges that: “Defendant threatens to, and in some instances does, remove games from Steam if a publisher sells a non-Steam enabled version for a lower price or on more favorable terms elsewhere.” (Really? That happens a lot, does it?)

Next steps - and what happens if Wolfire/Dark Catt ‘wins’?

Just to be crystal clear - both Wolfire and Dark Catt have reached the “fine, now prove it” stage of the legal process. This means that an immensely complex ‘discovery process’ may now start, including depositions, requests for productions of documents (including internal emails from Valve and the other companies), and more.

Does either Wolfire or Dark Catt have a strong enough case to win many of these points, if it got all the way to trial? I personally don’t think that Steam was extensively blocking competitive pricing on other PC platforms that sell games. (Steam key distribution is a more complex point, and arguably Valve’s prerogative. But that’s debatable and complex.) And I certainly don’t believe that the World Opponent Network gave Valve significant market power back in 2004 (!)

Which is where I start to get a bit confused. Neither of these suits seem like very practical ones to me. They are passionate points of view expressed in lawsuit form. You’re only going to be losing money by filing them - and I think both parties will have trouble wholesale winning the case, based on current or future evidence.

But I guess you might unearth something interesting in discovery that could influence public opinion, or force the judge to render a minor judgment against a platform? (But real talk: the Epic vs. Apple judge already said that U.S. courts can’t ‘tell’ a platform to decrease its cut from 30% to 20%. It’s too subjective & interfering. And the Steam ‘platform’ and ‘store’ aren’t ruled as separate. So you can’t take payment yourself, and then use Steam infrastructure.)

Plus: given how expensive the discovery process is, Wolfire or Dark Catt would surely need some kind of financial backer to afford discovery? A little like Peter Thiel vs. Gawker - or the ultimate example of this recently, Tim Sweeney vs. Tim Apple.

I don’t really understand what the upside would be for that person - if they exist. Though of course, IANAL. (Qualified ones, send us your opinions on the case!) And thus - despite making it through adversity, the future of these lawsuits seem cloaked in uncertainty.

[We’re GameDiscoverCo, an agency based around one simple issue: how do players find, buy and enjoy your premium PC or console game? We run the newsletter you’re reading, and provide consulting services for publishers, funds, and other smart game industry folks.]

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