Insights European Commission fines Valve and five publishers of video games €7.8 million for “geo-blocking” practices

The European Commission has fined Valve, owner of the online gaming platform “Steam”, and the five publishers Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax, € 7.8 million for breaching EU antitrust rules.

The Commission says that Valve and the publishers restricted cross-border sales of certain video games on the basis of the geographical location of users within the EEA, thereby engaging in “geo-blocking” practices. The fines for the publishers, totalling over €6 million, were reduced due to the companies’ cooperation with the Commission. Valve chose not to cooperate with the Commission and was fined over €1.6 million.

Steam is one of the world’s largest online video gaming platforms offering more than 35,000 games worldwide. It allows users, upon authentication, to directly download or stream video games. It also allows users who buy video games outside Steam, such as in brick-and-mortar shops (e.g. on DVDs) or digitally through downloads from third-party websites, to activate and play those games on Steam.

Valve provides video game publishers the technical means to activate and play games on Steam, including those games bought outside Steam, through “Steam activation keys”. Publishers include those keys in their video games for user authentication/activation. The video games are then sold by third party distributors across the EEA. Valve also offers the publishers a territory control function, which enables the setting up of geographical restrictions upon activation. The combination of Steam activation keys with the territory control function enables the “geo-blocking” of video games based on the geographical location of the user.

The video game publishers granted Valve a non-exclusive licence to exploit certain video games on a worldwide basis, including the entirety of the EEA. In turn, Valve granted the publishers a licence for the use of Steam activation keys for the distribution of those video games outside Steam. The publishers asked Valve to set up geographical restrictions and to provide geo-blocked Steam activation keys. The publishers provided those keys to their distributors for the sale and distribution of the video games in the Member States concerned. As a result, users located outside a designated Member State were prevented from activating a given PC video game with Steam activation keys.

The Commission found that by bilaterally agreeing to geo-block certain video games from outside a specific territory, Valve and each publisher partitioned the EEA market in violation of EU antitrust rules.  The geo-blocking practices concerned around 100 video games of different genres, including sports, simulation and action games. The Commission concluded that the practices denied European consumers the benefits of the EU’s Digital Single Market to shop around between Member States to find the most suitable offer. To read the Commission’s press release in full, click here.