A federal judge has accepted Valve’s motion to dismiss an anti-trust lawsuit against company Steam’s store and platform, saying that plaintiff Wolfire Games failed to establish the basic facts necessary to sustain the case going forward.
Wolfire’s lawsuit in part rested on the argument that Valve was illegally tying its Steam game store (which sells the games) to the separate Steam platform (which provides game library management, social networking, achievement tracking, Steam Workshop mods, etc.). Wolfire argued that Valve was using its dominant market position in digital PC game sales (accepted in the lawsuit as 75 percent of the market for full PC game sales) to illegally prop up the platform in a way that was not conducive to competition.
In a ruling issued late last week, though, Western District of Washington Judge John Coughenour said that no illegal tying could take place because the Steam store and platform “are a single product within the integrated game platform and transaction market.” That’s because the revenues from sales of games on the Steam store go directly toward supporting the “free” services available on the platform. And in the rare cases that games sold elsewhere make use of the Steam platform, Valve lets developers create free keys to enable that integration, obviating any potential harm.
Judge Coughenour also said that Wolfire failed to show that Valve’s 30 percent standard fee on Steam was “supracompetitive.” On the contrary, that 30 percent fee has remained constant since digital downloads were at a “fledgling stage,” well before Wolfire asserts Steam became “dominant” in the market in 2013.
What’s more, the judge writes, “other [digital storefronts] who charge less have failed, even though they had significant resources at their disposal. Therefore, it would appear that the market reality, at least as plead, is that Defendant’s fee is commensurate with the Steam Platform’s value to game publishers.” That value includes Steam’s massive player base, which Wolfire argued was “locked in” to Steam due to “immense network effects” but which the judge seems to accept in his ruling as an integral part of Steam’s value to developers.
In any case, Judge Coughenour also writes that Wolfire failed to establish how Valve’s alleged monopoly power brought direct harm to the developer. For instance, even if the court accepted Wolfire’s arguments that Valve’s actions led to an alleged “reduction in output and quality” across the industry, the original lawsuit “does not provide facts describing how Wolfire directly suffered” as a result.
Wolfire technically has 30 days to amend its complaint to address the criticisms and absences of facts brought up in this dismissal. But the sweeping decision does not bode well for the future of the case, to say the least.