The European Commission has reportedly penalized Valve, owner of “Steam”, the online PC gaming platform, and five other publishers namely Bandai Namco, Focus Home, Capcom, Koch Media, and ZeniMax with a €7.8 million fine for violating antitrust rules set by the EU.
It has been reported that Valve and the aforementioned publishers put restrictions on cross-border sales of PC video games based on users’ geographical location within the European Economic Area (EEA) by getting involved in “geo-blocking” practices. According to credible sources, the penalty for the publishers, summing up to €6 million, was reduced for cooperating with the Commission. Whereas, Valve chose not to cooperate and was penalized with over €1.6 million.
Margrethe Vestager, European Commission Executive Vice-President, and in charge of competition policy, stated that the regional videogame industry is thriving and is valued at over €17 billion. The ruling against the “geo-blocking” practices taken up by Valve and the five PC video game publishers is a stark reminder that the competition law of EU prohibits companies from restricting cross-border sales.
For those unaware, Steam is one of the largest online PC video gaming companies in the world and offers over 35,000 games globally. It allows users to directly download or stream PC video games. Even if the users purchase PC video games from brick-and-mortar shops or third-party websites, Steam allows them to activate and play video games.
Valve offers video game publishers the technical means to activate and play games on Steam, using “Steam activation keys”. The publishers then add those keys in their PC video games for user authentication. The PC video games are then sold and distributed by third party distributors across EEA. Valve also provides the publishers with a function of territory control, which allows them to establish geographical restrictions upon activation.
According to sources privy to the matter, the video game publishers had granted a non-exclusive license to Valve for exploiting certain PC video games on global level, including in the EEA. The publishers, in turn, obtained a license from Valve for using Steam activation keys for distributing those PC video games outside Steam.
The publishers had requested for geographical restrictions to Valve and asked for geo blocked activation keys and then gave those keys to the distributors for sale and distribution of the PC video games across concerned Member States. This prevented users located outside a designated Member State from activating particular PC video game using Steam activation keys.