EU's antitrust Commission sends a “Statements of Objections” to Valve and five other video game publishers for “geo-blocking” purchases

The EU has sent Valve, the creator of desktop gaming’s biggest storefront Steam and five other video game publishers a ‘Statements of Objections’ for “geo-blocking” PC video game purchases. In a statement, the EU found that these companies “prevented consumers from purchasing videogames cross-border from the other Member States, which is a breach of EU competition rules.”

Valve is the owner of the largest PC video game distribution platform called “Steam”. The other five PC video game publishers include Bandai Namco, Capcom, Focus Home, Koch Media, and ZeniMax. The ‘Statements of Objections’ was sent more than two years after the investigation was first opened against these companies.

Valve provides "activation keys" to these video game publishers which are required for consumers to play PC video games bought on channels other than Steam. However, Valve and the five PC video game publishers are accused of forming a bilateral partnership to prevent consumers from purchasing and using PC video games acquired elsewhere than in their country of residence. This is against EU antitrust rules and violates Article 101 of the Treaty on the Functioning of the European Union via Regulation 2018/302, which prohibits geo-blocking. Valve is accused of blocking cross-border sales of PC games in countries, including Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Romania.

EU Commissioner Margrethe Vestager, in charge of competition policy, said: "In a true Digital Single Market, European consumers should have the right to buy and play video games of their choice regardless of where they live in the EU. Consumers should not be prevented from shopping around between the Member States to find the best available deal. Valve and the five PC video game publishers now have the chance to respond to our concerns."

EU said it can "adopt a decision prohibiting the conduct and imposing a fine of up to 10% of a company's annual worldwide turnover" if it "concludes that there is sufficient evidence of infringement."

In a statement, Valve told Venture Beat, that while it has indeed worked with game publishers to implement region locks, these are not related to sales made through its Steam store. A spokesperson for Valve, Doug Lombardi, said, "The EC's charges do not relate to the sale of PC games on Steam. Instead, the EC alleges that Valve enabled geo-blocking by providing Steam activation keys and—upon the publishers' requests—locking those keys to particular territories within the EEA".

Valve further explained:

The region locks only applied to a small number of game titles. Approximately just 3 percent of all games using Steam -- and none of Valve's own games -- at the time were subject to the contested region locks in the EEA. Valve believes that the EC's extension of liability to a platform provider in these circumstances is not supported by applicable law.

Nonetheless, because of the EC's concerns, Valve actually turned off region locks within the EEA starting in 2015, unless those region locks were necessary for local legal requirements. Such as German content laws or geographic limits on where the Steam partner is licensed to distribute a game.

Koch Media claimed the proceedings date back to business performed before 2015 in a public statement. They said, “Koch Media will monitor the process closely and is fully committed to complying with all rules and regulations."

Valve’s multitude of online defenders opposed the EU’s decision considering, uniform prices may leave developers in a tricky position when it comes to finding the ideal price point. In a Hacker News thread, people wrote down their views:

“But now think about the consequences of this: everybody in the EU has to pay the same price for the games. There's an income difference of 5-10 times between different EU countries. The poorest ones will have to now pay the same price as the richest ones. A game costing >€60 when you have less than €300 disposable income per month is crazy expensive.”

“Why would everyone have to pay the same price for games? Where does this logic come from? The EU doesn't force you to price thing the same across all countries. But you are just not allowed to ban people from buying a thing in one EU country and take it to another - this is the CORE tenement of EU's single market and without this limitation, the EU single market cannot exist.”

Seeing the EU’s allegations, Valve will most probably stop all these practices in the EU, but continue to make profits elsewhere in the world. On Hacker News, a user wrote down Valve's response, “Basically, they don't agree with it, but stopped doing it years ago since they knew the EU was going to give them problems with it. They also said that it only applied to physical copies of games that included a code to redeem on steam, so they weren't making any money off of this, and it was only done at the request of some publishers.”