This photo illustration shows the Steam application on an iPhone.
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LONDON – European antitrust regulators have fined Valve and five other computer game publishers a fine of 7.8 million euros ($ 9.5 million) for a practice known as ‘geo-blocking’.
Valve is best known as the creator of the popular PC games store Steam.
The European Commission, the EU’s executive, said on Wednesday that Valve and other publishers restrict video game sales based on the geographical location of users. Such practices violate EU competition law.
The Commission said these practices were aimed at maintaining certain price differences between Eastern and Western European countries and preventing users from shopping around in the EU’s internal market.
The publishers include the Japanese gaming giants Bandai Namco and Capcom, the American firm ZeniMax – which owns the well-known gaming studio Bethesda Softworks – the French developer Focus Home and the German group Koch Media.
The fines for the publishers have been reduced to a maximum of 6 million euros 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.
“Today’s sanctions against the ‘geo-blocking’ practices of Valve and five PC video game publishers serve as a reminder that EU competition law prohibits cross-border sales contracts,” said EU Competition Commissioner Margrethe Vestager said in a statement. .
“Such practices deprive European consumers of the benefits of the EU’s digital market and the opportunity to search 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 allowed five prominent computer game publishers to distribute geo-blocked game codes for its Steam distribution platform.
“Users located outside a designated Member State have been prevented from activating a given computer video game with Steam activation keys,” the commission said.
Steam is a well known name in computer games. It is the largest online market for computer games and generates the most revenue for Valve, which is also known for many award-winning game series such as Half-Life and Portal.
Valve was founded in 1996 by former Microsoft employees Gabe Newell and Mike Harrington. The company has been privately owned since its inception.
The EU says Valve has agreed on bilateral deals with all the mentioned publishers to issue Steam keys that prevented the activation of certain games outside 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 restricting cross-border sales of games, the EU added. The bloc said that these transactions tend to take longer – between three and 11 years – and that they took place between March 2007 and November 2018.
According to the EU, this concerns about 100 computer games.
Why does it matter?
Vestager, Europe’s top competition official, has made a name for itself with the biggest tech titans in the United States. Wednesday’s news indicates that she is now focusing her attention on the massive video game sector.
According to market research firm Newzoo, the total game market will earn revenue of $ 159.3 billion by 2020. The PC gaming market would account for $ 36.9 billion, or 23%, of revenue.
Video games have received a huge boost due to the coronavirus pandemic as people spend more of their free time at home. According to the recent MarketWatch report, the global video game market was larger than the film industry and North American sports last year.
Consolidation has also increased recently, with Microsoft buying Bethesda parent company ZeniMax – one of the EU fines – for $ 7.5 billion in cash. Bethesda is known for hit games like Fallout and The Elder Scrolls.
Microsoft was not immediately available for comment on the EU fine when contacted by CNBC on Wednesday.