Last November, Western District of Washington Judge John Coughenour sided with Valve in dismissing a Steam antitrust lawsuit that had been filed by indie developer (and Humble Bundle creator) Wolfire Games. Now, that same judge is showing new respect for Wolfire’s arguments, allowing parts of an amended version of the complaint to move forward.
In a May 6 ruling (noted by Bloomberg Law), Judge Coughenour said that the allegations in Wolfire’s initial lawsuit were “anecdotal and threadbare” but that an amended lawsuit “provides additional context” and lays out a case that is “sufficient to plausibly allege unlawful conduct.” As such, the judge has refused to dismiss large parts of that amended case, letting it move forward through the long judicial process.
Now I see it
In his original ruling, Judge Coughenour dismissed Wolfire’s claims that Steam’s 30 percent fee to publishers was higher than what the company would take in a more competitive market. At the time, the judge noted that Steam’s fees had remained the same from its launch in 2003 through its alleged “market dominance” in 2013 and beyond.
In his new ruling, though, Judge Coughenour was receptive to the argument that Steam’s fees relative to the competition have changed during that time, writing, “In those early days, Defendant was competing against brick-and-mortar game distributors, [but] the [amended complaint] makes it clear that Defendant did not need market power to charge a fee well above its cost structure because those brick-and-mortar competitors had a far higher cost structure.”
The ruling also cites Valve’s 2001 purchase of Sierra’s World Opponent Network, an early online gaming platform that was shut down in 2004 after its games were folded into Steam. That action made Steam “instantly… a must-have platform,” according to the amended complaint, and “denotes market power earlier on” than previously acknowledged in the case, the judge wrote.
In his latest ruling, Judge Coughenour also seems newly receptive to earlier arguments that Valve uses its monopoly power and locked-in player base to impose punitive restrictions on publishers that might otherwise decide to avoid Steam. The ruling makes particular note of “a Steam account manager [who] informed Plaintiff Wolfire that ‘it would delist any games available for sale at a lower price elsewhere, whether or not using Steam keys [emphasis in original complaint].'” The amended suit also alleges that “this experience is not unique to Wolfire,” which could factor into the developer’s proposed class-action complaint.
Despite those changes, Judge Coughenour once again dismissed Wolfire’s argument that Valve had engaged in “illegal tying” between the Steam platform (which provides game library management, social networking, achievement tracking, Steam Workshop mods, etc.) and the Steam game store (i.e., the part that sells the games). Those two sides of Steam form a single market, the judge wrote, because “commercial viability for a platform is possible only when it generates revenue from a linked game store.” What’s more, the suit has not shown there is any sufficient market demand “for fully functional gaming platforms distinct from game stores.”
Valve’s alleged market-making power previously took center stage in Epic’s lawsuit against Apple, where Steam was used as a comparison point for Apple’s 30 percent fees on the iOS App Store.