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In this photo illustration, the Steam application seen displayed on an iPhone.
Guillaume Payen | SOPA Pictures | LightRocket via Getty Images
LONDON – European antitrust regulators have fined Valve and five other PC game publishers 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 PC game store.
The European Commission, the EU’s executive arm, said Wednesday that Valve and other publishers are restricting sales of video games based on the geographic location of users. Such practices infringe EU competition law.
The Commission said the practices were aimed at maintaining certain price differences between countries in Eastern and Western Europe and preventing users from shopping in the EU’s single market.
The publishers include the Japanese game giants Bandai Namco and Capcom, the American company ZeniMax – which owns the famous game studio Bethesda Softworks – the French developer Focus Home and the German group Koch Media.
Fines on these publishers have been reduced to a total of € 6 million 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.
“The sanctions taken today against the ‘geo-blocking’ practices of Valve and five PC video game publishers are a reminder that under EU competition law, companies are not allowed to contractually restrict cross-border sales, “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 ability to shop around for the most suitable offer in the EU.”
Valve was not immediately available for comment.
What did Valve do?
According to the EU, Valve has authorized five leading PC game publishers to distribute geo-blocked game codes for its Steam distribution platform.
“Users located outside a designated Member State have not been allowed to activate a given 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 its highly regarded 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 a private enterprise since its inception.
The EU said Valve has entered into bilateral agreements with all 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 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 entered into licensing and distribution agreements with clauses limiting cross-border sales of games, the EU added. The bloc said those deals tended to last longer – between three and 11 years – and took place between March 2007 and November 2018.
The practices involved around 100 PC games, according to the EU.
Why is it important?
Vestager, the biggest competition official in Europe, made a name for himself taking on the biggest tech titans in the United States. Wednesday’s news suggests she is now turning her attention to the massive video game industry.
The overall gaming market is expected to generate revenue of $ 159.3 billion in 2020, according to market research firm Newzoo. The PC games market represents $ 36.9 billion, or 23% of these revenues.
Video games have been given a huge boost by the coronavirus pandemic as people spend more free time at home. The global video game market was larger than the North American film industry and sports combined last year, according to a recent MarketWatch report.
It has also seen increased consolidation recently, with Microsoft taking over Bethesda’s parent company ZeniMax, one of the companies fined the EU, for $ 7.5 billion in cash. Bethesda is known for its successful game franchises like Fallout and The Elder Scrolls.
Microsoft was not immediately available to comment on the EU fine when contacted by CNBC on Wednesday.
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