In this photo illustration, the Steam application seen displayed on an iPhone.
Guillaume Payen | Pictures SOPA | LightRocket via 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 Steam computer game store.
The European Commission, the EU’s executive arm, said on Wednesday that Valve and other publishers had restricted sales of video games based on users’ geographical location. Such practices violate EU competition law.
The Commission said that these practices aim to maintain certain price differences between Eastern and Western European countries and to block users from shopping in the EU’s single market.
The publishers include Japanese gaming giants Bandai Namco and Capcom, the American company ZeniMax – which owns the well-known gaming studio Bethesda Softworks – the French developer Focus Home and the German group Koch Media.
Fines for these publishers have been reduced to a total of 6 million euros due to their cooperation with EU competition officials, the EU said. However, Valve was fined 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 companies are prohibited from restricting cross-border sales under EU competition law.” , EU Competition Commissioner Margrethe Vestager said in a statement. .
“Such practices deprive European consumers of the benefits of the EU’s digital single market and the opportunity to look for the best offer in the EU.”
Valve was not immediately available for comment.
What did Valve do?
According to the EU, Valve has allowed five prominent PC game publishers to distribute geographically locked game codes for its Steam distribution platform.
“Users outside a designated Member State have been barred from activating a particular video game on a computer with Steam activation keys,” the Commission said.
Steam is a household name in PC gaming. It is the largest online marketplace for computer games and generates the most revenue for Valve, which is also known for highly acclaimed game series such as Half-Life and Portal.
Valve was founded in 1996 by former Microsoft employees Gabe Newell and Mike Harrington. The company is privately owned since its inception.
The EU says Valve has agreed bilateral agreements with all appointed publishers to issue Steam keys that prevented the activation of certain games outside the Czech Republic, Poland, Hungary, Romania, Slovakia, Estonia, Latvia and Lithuania. These practices 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 concluded licensing and distribution agreements with clauses restricting cross-border sales of games, the EU added. The bloc said that these transactions tended to last longer – between three and 11 years – and took place between March 2007 and November 2018.
The practices concerned about 100 computer games, according to the EU.
Why does it matter?
Vestager, Europe’s top competition official, has made a name for himself as the biggest tech titan in the United States. Wednesday’s news suggests he is now turning his attention to the massive video game industry.
The entire gaming market was expected to earn $ 159.3 billion in 2020, according to market research firm Newzoo. The PC gaming market would account for $ 36.9 billion or 23% of that revenue.
Video games have gained momentum due to the coronavirus pandemic, as people spend more of their free time at home. The global video game market was larger than the North American combined film and sports industry last year, according to a recent MarketWatch report.
It also saw a recent boost, with Microsoft buying parent company Bethesda ZeniMax – one of the EU’s fined companies – for $ 7.5 billion in cash. Bethesda is known for successful game franchises such as Fallout and The Elder Scrolls.
Microsoft was not immediately available for comment on the EU fine when it was contacted by CNBC on Wednesday.