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Things Aren't Looking Good For Valve

The European Commission has fined five videogame publishers and Valve for geo-blocked distribution of games in the European Union. While most of the publishers received at least a 10% reduction of their fine as a reward for their cooperation, Valve received a "prohibitive decision" under "ordinary antitrust procedure" and was fined €1.6 million — roughly $1.9 million USD.

The European Commission's decision comes at the end of an inquiry that began in 2017 into the sale of video games at different prices in different regions of the EU and their activation on Valve's Steam platform. According to a press release sent out by the European Commission, Valve arranged deals with five publishers, Bandai Namco, Capcom, Focus Home, Koch Media, and ZeniMax, that restricted cross-border game sales in certain countries. These arrangements constituted a violation of the EU Digital Single Market laws.

The process through which Valve and the publishers broke these rules is a little convoluted, but it has been mapped out in a handy chart shared on the EU Competition Twitter account. Essentially, the publishers involved sold games at reduced prices in eight countries in the EU which have lower average incomes, including Hungary, Poland, and Slovakia. Simultaneously, the publisher had deals in place with Valve to assign a Steam authentication key to each unit sold, which allows products bought outside of the Steam digital marketplace to be activated on the service.

All of this would have been fine if it were not for Valve's arrangement with publishers to include location-specific restrictions on those activation keys. Referred to as "geo-blocking" in the European Commission's report, these restrictions meant that consumers who purchased a game, possibly at a lower price, in Poland or Hungary, could not activate and play the game on Steam while in France or Germany.

In the report, executive vice-president Margrethe Vestager explains that this practice violates the EU Single Digital Market because it denies consumers "the opportunity to shop around for the most suitable offer in the EU." Later in the same report, it was further explained that the geo-blocking violated Article 101 of the Treaty on the Functioning of the European Union, which bans any practices that "prevent, restrict or distort competition within the EU's Single Market."

The report also includes another helpful chart that shows the specific reductions of fines for each publisher as a reward for their cooperation with the investigation. Bandai Namco, Focus Home, Koch Media, and ZeniMax all received a 10% reduction, while Capcom received a 15% reduction. The report notes that Valve "chose not to cooperate with the Commission," and was therefore fined the full amount. However, The Verge reports that Valve's vice-president of marketing, Doug Lombardi, has disputed this claim, and Valve will appeal the decision.