Valve Asks Court to Ax Wolfire Games and Gamers’ Antitrust Suit

Valve, a video game developer, publisher, and digital distribution company, hit back at San Francisco-based Wolfire Games in a lawsuit alleging that Valve orchestrated an anticompetitive scheme that earned it massive profits at the expense of competition in the PC gaming industry. 

The amended complaint, Valve says, failed to allege requisite antitrust and consumer protection claim elements, even with its added, alternative market allegations, and therefore must be dismissed.

Since Wolfire and two consumers filed suit in April, Valve has moved to compel arbitration as to the seven gamer-plaintiffs’ claims. Consequently, Valve presents the Western District of Washington court with options: stay Wolfire’s claims until the conclusion of the gamers’ arbitration or address and grant its motion to dismiss now.

Valve first contended that there is nothing unlawful about its “Steam Keys” program pricing. By way of background, Steam explained that when a gamer buys the Steam Key from another developer, they log into Steam, enter the code, and download and play the game on Steam “using Valve’s infrastructure just as if the game was purchased on Steam — all without anyone paying Valve anything.”

The plaintiffs took issue with Valve’s alleged price parity policy that reportedly prevents competing distributors from offering video games at prices lower than those offered in Steam’s store. Valve countered that because it gives the codes away to developers for free, which it is under no duty to do, it also has no duty under antitrust laws to allow developers to “use free Steam Keys to undersell prices for the games they sell on Steam.”

Among other arguments, Valve asserted that the 30% commission it levies on games sold to consumers on Steam, which it noted is reduced at larger sales volumes, is not above the competitive level. Factual allegations neither prove that the fee is supracompetitive nor that Valve can charge that amount only because of its alleged dominance. In support of this argument, the dismissal filing pointed to complaint allegations that Valve charged the same percentage when competition was vibrant and when Valve had zero market share in the industry.

In addition, the plaintiffs’ failure to define a relevant market dooms their antitrust contentions, Valve argued. “They allege that Valve unlawfully tied game sales to its PC gaming platform, or used its supposed monopoly (or attempted monopoly) in PC gaming platforms to stifle competition in game sales, but those theories apply only if games and the platforms on which they are played are separate products that compete in separate markets,” the memorandum said.

Too, the defendant asserted that the plaintiffs’ market power allegations, that Steam holds 75% market share, are unsubstantiated. This deficiency alone justifies dismissal, Valve contended. The plaintiffs’ opposition is due Aug. 30, and the defendant’s reply Sept. 17.

Wolfire and the gamers are represented by Quinn Emanuel Urquhart & Sullivan LLP and Constantine Cannon LLP, and Valve by Fox Rothschild LLP and Montgomery McCracken Walker & Rhoads LLP.