In this photo illustration the Steam application is shown on an iPhone.
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LONDON – European competition authorities have fined Valve and five other PC game publishers a total of EUR 7.8 million ($ 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 have restricted sales of video games based on users’ geographic location. Such practices are in breach of EU competition law.
The Commission said these practices aimed to maintain certain price differentials between Eastern and Western European countries and dissuade users from shopping around the EU’s internal market.
The publishers include the Japanese gaming giants Bandai Namco and Capcom, the American ZeniMax – which owns the well-known game studio Bethesda Softworks – the French developer Focus Home and the German group Koch Media.
Fines for those publishers were reduced to a maximum of € 6 million for 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 the ‘geo-blocking’ practices of Valve and five PC video game publishers are a reminder that EU competition law prohibits companies from contractually restricting cross-border sales,” said EU Competition Commissioner Margrethe Vestager. a statement. .
“Such practices deprive European consumers of the benefits of the EU Digital Single Market and the ability to search for the most suitable offer in the EU.”
Valve was not immediately available for comment.
What has Valve done?
According to the EU, Valve allowed five prominent PC game publishers to distribute geo-blocked game codes for its distribution platform Steam.
“Users outside a designated member state were unable to activate a particular PC video game with Steam activation keys,” the Commission said.
Steam is a household name in PC gaming. It is the largest online marketplace for PC games and generates the most revenue for Valve, which is also known for 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 entered into bilateral agreements with all the named publishers to issue Steam keys that prevent activation of certain games outside of the Czech Republic, Poland, Hungary, Romania, Slovakia, Estonia, Latvia and Lithuania. These practices last from one to five years and, according to the Commission, were applied between September 2010 and October 2015.
Meanwhile, Bandai Namco, Focus Home, Koch Media and ZeniMax have entered into licensing and distribution agreements with clauses restricting cross-border game sales, the EU added. The block said these deals typically lasted longer – between three and 11 years – and took place between March 2007 and November 2018.
According to the EU, the practices involved around 100 PC games.
Why does it matter?
Vestager, Europe’s top match official, has made a name for himself taking on some of the biggest tech titans in the United States. Wednesday’s news suggests she’s now turning her attention to the massive video game sector.
According to market research firm Newzoo, the entire games market is expected to generate $ 159.3 billion in revenue by 2020. The PC gaming market is said to represent $ 36.9 billion, or 23%, of that revenue.
Video games have received a big boost from the coronavirus pandemic as people spend more of their free time at home. The global video game market outnumbered the movie industry and North American sports combined last year, according to a recent MarketWatch report.
Lately, there has also been increased consolidation, with Microsoft buying Bethesda parent company ZeniMax – one of the companies fined by the EU – for $ 7.5 billion in cash. Bethesda is known for popular game franchises such as Fallout and The Elder Scrolls.
Microsoft was not immediately available for comment on the EU fine on Wednesday when CNBC reached out.