The creators of Humble Bundle are suing Valve for monopolistic behavior in a class action lawsuit

[JLO64]

Sorry for the formatting, I’m on mobile

 

Summary

The indie game developers behind Humble Bundle Wolfire Games have filed a class-action lawsuit against Valve for monopolistic control over the digital game distribution market and the way they have used that to charge a 30% cut for all sales that pass through them.

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The lawsuit, filed in a Washington state federal court, centers on what it considers an illegal tying of the Steam gaming platform (which provides game library management, social networking, achievement tracking, Steam Workshop mods, etc.) and the Steam game store (which processes online payments and delivers a copy of the game). After years of growth, the vast majority of PC gamers are locked in to the Steam platform thanks to "immense network effects" and the high switching costs to move to a new PC platform, the suit argues.

 

An interesting complain being brought up against Steam are the significant restrictions they have on their Steam Keys which developers can generate to sell on other platforms like the Humble Bundle Store.

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But Valve places significant limits on this feature, which "[rigs] the Steam Keys program so that it serves as a tool to maintain Valve’s dominance," according to the lawsuit. That includes a "Price Parity Rule" that tells publishers, "Steam keys cannot be sold on other sites unless the product is also available for purchase on Steam at no higher a price than is offered on any other service or website." Valve also reserves the right to deny key requests if the publisher asks for an "extreme number of keys and [isn't] offering Steam customers a good value" (as the suit notes, the precise definitions of "extreme" and "good value" are unspecified and determined by Valve).

 

When requesting keys, publishers also have to click a box saying, "I agree that I am not giving Steam customers a worse deal." And Valve also makes use of what the lawsuit calls a selectively enforced "Price Veto Provision" to alter the Steam Store pricing of games that are offered cheaper elsewhere, even in the case of games that don't make use of the Steam platform.

 

The suit concludes stating that if it weren’t for Valve then the PC game market would be better off for both developers and consumers.

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"At bottom, Valve’s scheme imposes a massive tax on the PC Desktop Gaming industry," the suit argues in seeking the usual mix of damages and injunctive relief to fix the situation. "If Valve did not block price competition for Steam-enabled games, gamers and publishers would be able to have a seamless and non-fragmented platform while also enjoying the benefits of price competition in the distribution market. That would improve quality for gamers and publishers alike, all while lowering prices for everyone."

My thoughts

Steam is a monopoly. 

 

There is no getting around that fact, and I for one 100% side with Wolfire Games in this lawsuit. Without a doubt in my mind, Valve has created one of the biggest monopolies (by market and mind share) the tech industry has ever seen. Unlike other monopolistic companies and products though, they have a very positive public sentiment and have leveraged that to charge 30% for developers to host their games on their platform. It’s not the amount of the cut that I’m taking issue with but that fact that at the scale they’re operating at, their marginal costs for maintaining their servers is tiny in comparison to the sheer amount of revenue they must be pulling in. Valve isn’t a publicly traded company so we don’t have access to their balance sheets, but I would be willing to bet cash that they have one of the largest margins in the tech industry for doing effectively nothing.

 

I know that speaking positively about the Epic Games Store is really taboo among the PC gaming community in general, but the fact of the matter is that they’ve been trying to enter a market dominated by Valve while trying to give developers a 18% cut. So far they’ve only managed to make a 2% dent in Valve’s total marketshare and that’s with them losing $300 million on the store. To be clear, I am not defending all of their practices and I really believe they have made some horrendous decisions that have permanently scarred their relationship with the gaming community, but the end of the day they’re not evil

 

That’s not to say that there aren’t other players in the digital game distribution. GOG, EA Origin, Ubisoft Connect, Discord, and the Microsoft Store (I’m not counting Xbox Gamepass) all operate in this market. That being said, you can probably tell towards the end of that list that I was scraping the bottom of this barrel. Additionally, despite the fact that these storefronts exist, not than many people actually use them and they all equally suffer from Steam’s dominance.

 

Honestly, I think what’s going to be key to the outcome of this lawsuit is the verdict of the Apple vs Epic fight which is scheduled to begin court hearings next month. If the courts side with Apple then Valve will probably be allowed to continue charging their 30% cut. If Wolfire wins then the chances of them winning this lawsuit 

 

That being said, I wouldn’t be surprised if the losing party tries to drag this case to the US Supreme Court, draging this fight out even longer.

 

Sources

https://arstechnica.com/gaming/2021/04/humble-bundle-creator-brings-antitrust-lawsuit-against-valve-over-steam/

https://www.scribd.com/document/505496523/COMPLAINT-filed-by-Wolfire-Games-against-Valve-Corporation-CASE-NO-2-21-CV-563?campaign=SkimbitLtd&ad_group=92X590208Xcf0bcbaeb8a68913c1d153931b614e81&keyword=660149026&source=hp_affiliate&medium=affiliate

[givingtnt]

"monopolistic behavior"
>>Epic Games has entered the chat

[JLO64]

Btw, I fully realize that if this was a post on Reddit I would be getting thousands of downvotes. Let’s try and have the comment section be more than “Valve good, Epic bad”.

[Guest]

Bad time to be a successful company these days. If it weren’t for steam, people still probably going out to a store to buy games. 

[TVwazhere]

9 minutes ago, JLO64 said:

Honestly, I think what’s going to be key to the outcome of this lawsuit is the verdict of the Apple vs Epic fight which is scheduled to begin court hearings next month. If the courts side with Apple then Valve will probably be allowed to continue charging their 30% cut. If Wolfire wins then the chances of them winning this lawsuit 

I don't necessarily view that as a significant factor, because PC users aern't locked into only using Valve games the way Apple users are locked into only using the Apple store (no side loading). 

 

Valve is a significant share of the PC gaming community sure, but it didn't get there by buying out competition and shutting them down, getting exclusives from developers, or paying influencers to advertise their services. They just provided a good game store and users have bene using it for over a decade. 

[JZStudios]

Kind of surprised to see the guy (Singular) at Wolfire attempt this. Even with the new exponential growth they're only at like 2 or 3 full time employees last I knew.

But I've been saying this for years. I never understood why people like Steam so much for it's anti-consumerist practices, then give EGS shit for giving developers an option.

[WereCatf]

I'm not sure I understand how I'm "locked in" to Steam. I mean, the games I have in my Steam-library are, but at the same time, it doesn't in any way or form prevent me from buying games on e.g. GOG. Also, I can make use of Steam itself to play games from e.g. the aforementioned GOG with features like Steam's overlay or Remote Play (something that I find a very valuable feature and which none of the competitors offer!)

[somer4ndo]

4 minutes ago, JLO64 said:

Let’s try and have the comment section be more than “Valve good, Epic bad”.

But Valve good, Epic bad??? I mean, yea, they are sort of monopolistic and unreasonable, but I still consider valve in general a good company, Humble Bundle has a point, and a case, against valve but Epic has absolutely nothing to do with this. I'd consider Epic Games to be an actually greedy corporation that will end up damaging both consumers(already happened) and developers as soon as they get a chance, Epic would have a monopoly if they could.

[IkeaGnome]

1 minute ago, somer4ndo said:

Epic would have a monopoly if they could.

So would any other company.

[JZStudios]

8 minutes ago, gabrielcarvfer said:

This makes no sense:

- Steam is not preventing anyone from selling anything anywhere;

- You can choose to sell or not on steam;

- You can sell directly to customers;

- By selling Steam keys, you're using their infrastructure to deliver the games.

 

Humble does not have any infrastructure or maintaince costs for games sold using Ubisoft, Steam, Epic, Nintendo keys...

Not technically, but Steam is the only market you can sell on if you actually want to sell your game. Otherwise according to this, they're preventing you from selling keys for arbitrary reasons and they can change the sale price of your game if they feel like it to match the price somewhere else.

Yes, but also no. People boycott everything that isn't Steam.

No, you can't. That's what this argument is about.

But it's not going through their store, which again, is what the argument is about.

[Quackers101]

While I do agree that steam kind of locks a lot of people to their platform, some due to their "support" too.  For the library, workshop and so on.

I do wish some games could be access without steam. Like from the library part, were a lot of games would not launch without steam.

Some do, some don't.

 

Of course there are other paths one can take, but there is a big restriction on what is locked behind steams doors.

Some makes sense, other parts doesn't. Also most developers on PC knows you have to be on steam to gain some visibility or through social media/youtube let's plays.

[JZStudios]

9 minutes ago, IkeaGnome said:

So would any other company.

Yeah, I've heard Valve does that.

Sweet talking about Valve is like "Yeah, sure they murder babies, but they're not that bad and they have a Jesus figure with a cult following."

[IkeaGnome]

17 minutes ago, JZStudios said:

Yeah, I've heard Valve does that.

Sweet talking about Valve is like "Yeah, sure they murder babies, but they're not that bad and they have a Jesus figure with a cult following."

For sure. I was more talking about the person pointing out that Epic would if they could. Like that makes Epic different from any other company.

[BachChain]

Has anyone considered the possibility that Steam is a monopoly primarily because other stores just suck? The ones that aren't app store clones are publisher specific gardens surrounded by walls of crap (u-play, anyone?).

48 minutes ago, JLO64 said:

So far they’ve only managed to make a 2% dent in Valve’s total marketshare and that’s with them losing $300 million on the store.

$300M blown on exclusivity bribes; meanwhile, the store itself doesn't even have a shopping cart.

[poochyena]

48 minutes ago, JLO64 said:

Steam is a monopoly. 

No they aren't. Amazon, gamestop, and epic games just to name a few competitors.

 

These steam lawsuits are complete garbage. All they are are mindless ramblings about the way valve runs its business without actually pointing out anything actually illegal it does. "waaaaahhhhh 30% is too much, I don't like it! I'm going to sue you to lower it!"
They want the benefits of being on a marketplace, without having to pay for those benefits. They are just greedy.

Steam does not have a monopoly, they can move to any other marketplace or even sell their games on their own platform. The great thing about capitalism is they have a choice to do what they want. I had a business on Etsy, and I hated the increase in fees and other things they did. What did I do? Sue Etsy? No, I moved my business to another platform. Not only is my revenue up, but i'm paying much less in fees too.
Anyone who tries to insist steam is a monopoly has absolutely no clue what they are talking about.

[Blademaster91]

I don't really see the 30% cut as an issue, I'd like to see Valve lower their cut but they have more on their store to manage than for example Epic does.

On PC you aren't forced to use Steam, you can get games from others stores besides Steam and thats exactly what Humble does, or you can get games from GOG. I consider Valve to be a better company than Epic, because Valve doesn't force developers to sell only on Steam, and Steam is a significantly better platform to use. The epic store doesn't even have basic features like a shopping cart, a review system, or remote play.

[dalekphalm]

Disclaimer: I use Steam as my primary platform for PC games (I do use other platforms but it is what it is).

 

But let's be totally clear here: I constantly see posts about how users won't buy a game if it's not on Steam. Hell, even sometimes they outright say they will pirate the game rather than buy it from Epic or the Microsoft Store, etc.

 

I definitely think there's some merit to these claims. Steam might not be a technical monopoly, but they're pretty damn close.

 

With that in mind, balance must be gained between the business interests of Steam vs the consumer interests of everyone else. This isn't black and white. Steam isn't good nor bad. It has both good and bad aspects. Something needs to be done, but it doesn't necessarily mean Valve loses control over their own platform.

[poochyena]

4 minutes ago, Blademaster91 said:

I don't really see the 30% cut as an issue, I'd like to see Valve lower their cut but they have more on their store to manage than for example Epic does.

absolutely. I think the only people who see 30% as too much don't realize that 50% cut is actually the standard for retail. And as you explain, steam does offer a lot more than just a place to buy a game, its a social network.

 

5 minutes ago, dalekphalm said:

I constantly see posts about how users won't buy a game if it's not on Steam. Hell, even sometimes they outright say they will pirate the game rather than buy it from Epic or the Microsoft Store, etc.

eh, of course there are steam fanboys, but they are a small minority and exist in every community. I'd bet my house that there are nearly as many people who say the same about epic, that they'd only buy games on Epic store and never steam. Think of all the people whose first or main gaming experience is from fortnite.

[WereCat]

I know that Steam has its flaws and they also tried some shady stuff but it's just so much better than any other store out there... 

 

The workshop alone is so good, easy access to mods... its really difficult to get an alternative. 

 

I agree that the % cut they take may be too high, at the very least they offer features that other stores don't have. 

On the other hand, if I was a developer, I would like that the cut gets lower if my game does not support XYZ features like the before mentioned workshop for example. 

[Zodiark1593]

54 minutes ago, BachChain said:

Has anyone considered the possibility that Steam is a monopoly primarily because other stores just suck? The ones that aren't app store clones are publisher specific gardens surrounded by walls of crap (u-play, anyone?).

$300M blown on exclusivity bribes; meanwhile, the store itself doesn't even have a shopping cart.

GoG is pretty much the only game in town when I want DRM-free standalone games. And for my particular use case (pc gaming with no home internet), this is pretty crucial, as online DRM kind of screws me over. 
 

To be clear, I’d much prefer to buy my games standalone from the actual dev/publisher, but hardly anyone does that. 

[FakeATF]

What an idiotic lawsuit.

 

Steam is arguably the best game launcher out there, so being succesful is a "monopoly" now.

If you sell something through the steam store, you have to agree to Steam and Valve's rules. These devs are trying to make their own rules because they don't like what Valve has laid out in their rules. IMO there's no way that this case is going to go anywhere.

 

 

[Lurick]

Wait, is this the same Humble Bundle that recently capped/cut the donations to charity from 100% to 15%?

https://www.nintendolife.com/news/2021/04/humble_bundle_will_begin_to_cap_charity_donations_next_month

 

Edit:

So the creators of humble bundle sold the company a while back so the current owners are the ones involved in this donation cut but the original owners (not involved with humble anymore) are the ones pushing this lawsuit and not the current owners of the company as it stands today.

[JLO64]

1 hour ago, poochyena said:

1 hour ago, Blademaster91 said:

I don't really see the 30% cut as an issue, I'd like to see Valve lower their cut but they have more on their store to manage than for example Epic does.

absolutely. I think the only people who see 30% as too much don't realize that 50% cut is actually the standard for retail. And as you explain, steam does offer a lot more than just a place to buy a game, its a social network.

Here’s the thing, retail needs to take a 50% cut in order to maintain profitability since a location needs to pay its utility bills, workers wages, rent, etc. All Valve has to do is pay their AWS (or whoever runs their servers) bill, maintain software that’s several decades old by this point, and spend a bit on random RnD projects.  Granted this is a massive oversimplification of their costs but the point still stands. They really don’t spend that much to make a boat load of cash since they have no real competitors.

 

Now I’m not saying that Valve should be forced by any government to lower its prices (something I think I should’ve stated above) but if natural market competition existed they would be forced to do so either way due to competition which we’ve established doesn’t exist. Also, while I do think Valve maintains a monopoly, I don’t think they’ve done anything explicitly illegal or immoral to get where they are today.

 

1 hour ago, BachChain said:

$300M blown on exclusivity bribes; meanwhile, the store itself doesn't even have a shopping cart.

While I am not going to even bother defending how barebones EGS is I’m fairly certain that the majority of that $300M has been blown on the weekly free games.

 

Off topic now, what do you mean by “social network”? Steam isn’t a social media platform?

[tikker]

2 hours ago, JLO64 said:

 "Steam keys cannot be sold on other sites unless the product is also available for purchase on Steam at no higher a price than is offered on any other service or website."

 

When requesting keys, publishers also have to click a box saying, "I agree that I am not giving Steam customers a worse deal." And Valve also makes use of what the lawsuit calls a selectively enforced "Price Veto Provision" to alter the Steam Store pricing of games that are offered cheaper elsewhere, even in the case of games that don't make use of the Steam platform.

In other words they want to use Steam's services and distribution but don't want to give Steam a cut. The second point I don't understand. How can you sell on Steam yet not make use of the Steam platform?

2 hours ago, JLO64 said:

"If Valve did not block price competition for Steam-enabled games, gamers and publishers would be able to have a seamless and non-fragmented platform while also enjoying the benefits of price competition in the distribution market. That would improve quality for gamers and publishers alike, all while lowering prices for everyone."

So what do they want? Sell their game at an 42% markup on Steam such that after the 30% cut they get full price? You can argue about that 30% being fair or not, but this just sounds like they want all the pluses and none of the minuses.

 

2 hours ago, JLO64 said:

I know that speaking positively about the Epic Games Store is really taboo among the PC gaming community in general, but the fact of the matter is that they’ve been trying to enter a market dominated by Valve while trying to give developers a 18% cut. So far they’ve only managed to make a 2% dent in Valve’s total marketshare and that’s with them losing $300 million on the store. To be clear, I am not defending all of their practices and I really believe they have made some horrendous decisions that have permanently scarred their relationship with the gaming community, but the end of the day they’re not evil

For me it's more that Epic does less than the bare minimum to make their store an actual store (shopping cart anyone?) and just keeps buying up exclusives, making big losses and calling that a win.

 

  

23 minutes ago, Lurick said:

Wait, is this the same Humble Bundle that recently capped/cut the donations to charity from 100% to 15%?

 

https://www.nintendolife.com/news/2021/04/humble_bundle_will_begin_to_cap_charity_donations_next_month

I didn't even realise this (been a while since I've bought a HB). Not so humble anymore? Then again it used to be either older games and smaller indie games, perhaps their offerings have changed.

[KaitouX]

Wasn't the rules regarding Steam keys thing done because there was abuse going on? I thought they had no special rules for that but it started getting abused so they implemented those rules, but maybe I'm wrong.