`
`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`
`Wolfire Games, LLC, William Herbert and
`Daniel Escobar, individually and on behalf of
`all others similarly situated,
`Plaintiffs,
`
`v.
`Valve Corporation,
`Defendant.
`
`CASE NO. 2:21-CV-563
`
`CLASS ACTION COMPLAINT
`DEMAND FOR JURY TRIAL
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`CLASS ACTION COMPLAINT
`CASE NO. 2:21-CV-563
`
`QUINN EMANUEL URQUHART & SULLIVAN
`1109 FIRST AVENUE, SUITE 210
`SEATTLE, WASHINGTON 98101
`TEL: (206) 905-7000
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`
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`Case 2:21-cv-00563-JCC Document 1 Filed 04/27/21 Page 2 of 78
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`TABLE OF CONTENTS
`
`1.
`2.
`3.
`
`OVERVIEW OF THE ACTION....................................................................................................... 1
`PARTIES........................................................................................................................................... 7
`JURISDICTION AND VENUE........................................................................................................ 8
`FACTUAL ALLEGATIONS............................................................................................................ 9
`I. Overview of PC Desktop Gaming And Valve .......................................................................... 9
`A.
`Overview of the Relevant Markets................................................................................... 10
`PC Desktop Games ....................................................................................................... 11
`PC Desktop Gaming Platforms..................................................................................... 16
`PC Desktop Game Distribution .................................................................................... 21
`Valve—A PC Desktop Game Publisher Turned Gaming Platform Monopolist.............. 24
`B.
`II. Valve Possesses Monopoly Power In The Relevant Markets For PC Desktop Gaming
`Platforms and PC Desktop Game Distribution ............................................................................... 27
`A.
`The Steam Gaming Platform Is Dominant in the PC Desktop Gaming Platform Market 28
`B.
`The Steam Store is Dominant in the PC Desktop Game Distribution Market ................. 33
`III.
`Steam Has Illegally Monopolized the Market for PC Desktop Game Distribution............. 34
`A.
`Valve Mandates That All Publishers Distribute the Vast Majority of Their Steam-
`Enabled Games Through Valve’s Steam Store........................................................................... 35
`B.
`Valve Distorts Competition Through The Steam Key Price Parity Provision ................. 38
`C.
`Valve Restrains Competition Through the Price Veto Provision..................................... 41
`D.
`The Steam Store’s Discovery Algorithm Works With Valve’s Price Parity Requirements
`to Artificially Inflate Prices Across the Industry ........................................................................ 44
`E.
`Valve Uses its Key-Based Model to Block Competition for Third-Party Distribution.... 45
`IV.
`Attempts at Entry Into the Relevant Markets Have Failed because of Valve’s Conduct .... 48
`Electronic Arts (“EA”).................................................................................................. 50
`1.
`Discord.......................................................................................................................... 52
`2.
`Microsoft, Amazon, Google.......................................................................................... 54
`3.
`Epic Game Store ........................................................................................................... 55
`4.
`V. Valve’s Anticompetitive Practices Directly Harm Both Game Publishers and Game
`Purchasers........................................................................................................................................ 59
`CLASS ACTION ALLEGATIONS................................................................................................ 66
`INTERSTATE TRADE AND COMMERCE................................................................................. 68
`CAUSES OF ACTION ................................................................................................................... 69
`PRAYER FOR RELIEF.................................................................................................................. 74
`JURY DEMAND ............................................................................................................................ 75
`
`CLASS ACTION COMPLAINT
`CASE NO. CASE NO. 2:21-CV-563
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`QUINN EMANUEL URQUHART & SULLIVAN
`1109 FIRST AVENUE, SUITE 210
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`Case 2:21-cv-00563-JCC Document 1 Filed 04/27/21 Page 3 of 78
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`Plaintiffs Wolfire Games, LLC, William Herbert, and Daniel Escobar (“Plaintiffs”) bring
`this action against Valve Corporation (“Valve”) under federal and state antitrust laws and state
`unfair competition laws, seeking public injunctive relief and damages, and allege as follows:
`OVERVIEW OF THE ACTION
`Video games are a vital part of American culture and industry. Many millions of
`1.
`Americans play video games, creating hundreds of thousands of skilled jobs across the country
`with a focus on computer science, artistry, and innovation. Personal Computer (“PC”) games, a
`subset of video games, alone generate at least $30 billion worldwide annually.
`2.
`Of those sales, approximately 75% flow through the online storefront of a single
`company, Valve. Valve’s online game store, the “Steam Store,” dominates the distribution of PC
`games. And Valve uses that dominance to take an extraordinarily high cut from nearly every sale
`that passes through its store—30%. This 30% commission yields Valve over $6 billion dollars in
`annual revenue. For everyone else, it yields higher prices and less innovation.
`3.
`Valve is able to extract such high fees because it actively suppresses competition to
`protect its market dominance. Many other game stores have tried to charge lower fees, in the
`range of 10-15%, but they have all failed to achieve significant market share. This is because
`Valve abuses its market power to ensure game publishers have no choice but to sell most of their
`games through the Steam Store, where they are subject to Valve’s 30% toll.
`4.
`Valve knows that for PC games to succeed they must, with rare exceptions, be
`compatible with Valve’s PC Desktop Gaming Platform—the “Steam Gaming Platform.” Valve’s
`Steam Gaming Platform provides a software environment where gamers can maintain their library
`of games, connect with others for social networking and multiplayer gaming, and access other
`ancillary services provided by Valve, like the tracking of gaming achievements. The Steam
`Gaming Platform is by far the largest PC Desktop Gaming Platform in the United States (and the
`world), and PC game publishers consider it essential for their games to be compatible with the
`Steam Gaming Platform. Otherwise, they cannot reach the vast majority of their potential
`customers.
`
`CLASS ACTION COMPLAINT
`CASE NO. CASE NO. 2:21-CV-563
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`QUINN EMANUEL URQUHART & SULLIVAN
`1109 FIRST AVENUE, SUITE 210
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`Valve takes advantage of the must-have nature of its Steam Gaming Platform to
`5.
`exploit publishers and consumers. The scheme is straightforward. If a game publisher wants to
`sell games that are enabled for the Steam Gaming Platform, Valve requires the publisher to sell the
`vast majority of its games through Valve’s Steam Store. And when the game publisher sells
`through the Steam Store, Valve takes its 30% cut of nearly every sale.1 Through this scheme,
`Valve leverages the dominance it has in the PC Desktop Gaming Platform Market from its control
`of the Steam Gaming Platform (where games are played) to keep prices high, and to gain and
`maintain dominance in the separate market for PC Desktop Game Distribution (where games are
`bought and sold).
`6.
`While gamers, publishers, and industry insiders sometimes colloquially refer to
`Steam as a single product, there are in fact two separate components to Steam—the Steam Gaming
`Platform (where games are played) and the Steam Store (where games are bought and sold).
`Valve’s scheme ties the two together so Valve can dominate both. Absent Valve’s anticompetitive
`conduct, robust competition could take place in these separate markets, with game distributors
`offering games for any PC Desktop Gaming Platform, and PC Desktop Gaming Platforms
`connecting to a multitude of game distributors. Valve abuses its market power from the Steam
`Gaming Platform to block these competitive possibilities so it can continue to capture 30% of
`most PC Desktop Games sold.
`7.
`Valve’s scheme has been wildly successful. One former Valve employee aptly
`described the Steam Store as a “virtual printing press” that imposes a “30% tax on an entire
`industry.”2 Innovation is the engine of the video game industry, but Valve’s imposition of this tax
`suppresses innovation and output across the industry and elevates the prices of PC Desktop
`
`
`1 Effective as of October 1, 2018, Valve has three tiers for its commission fee: 30% on all of a
`game’s earnings under $10 million; 25% on all of a game’s earnings between $10 million and $50
`million; and 20% on all of a game’s earnings over $50 million. The vast majority of sales to
`consumers through the Steam Store are at the 30% commission rate.
`2 Andrew McMahon, Former Valve Employee Says Steam Was Killing PC Gaming, Epic Games
`Is Saving It, TWINFINITE (Apr. 8, 2019), https://twinfinite.net/2019/04/former-valve-employee-
`says-steam-was-killing-pc-gaming-epic-games-is-saving-it/.
`
`CLASS ACTION COMPLAINT
`CASE NO. CASE NO. 2:21-CV-563
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`QUINN EMANUEL URQUHART & SULLIVAN
`1109 FIRST AVENUE, SUITE 210
`SEATTLE, WASHINGTON 98101
`TEL: (206) 905-7000
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`Games. Forced to pay Valve’s tax, game publishers invest less in creating new games and must
`charge higher prices, therefore selling fewer games to consumers. The only one benefitting is
`Valve, which makes astronomical profits.
`8.
`Although Valve’s financials are secret given its status as a private corporation, the
`market for PC Desktop Game Distribution (defined and described further below) is worth
`approximately $30 billion annually. With the Steam Store’s 75% share, that means approximately
`$22.5 billion in sales occur through the Steam Store per year. Yet Valve devotes a miniscule
`percentage of its revenue to maintaining and improving the Steam Store, and dedicates very few
`employees to that effort. Thus, Valve receives about $6 billion or more per year from
`commissions largely just for serving as a middleman between publishers and gamers. With
`roughly 360 employees, Valve’s per-employee profit is around $15 million, making Valve, by that
`metric, one of the most profitable companies in the world.
`9.
`It is not enough for Valve to require game publishers to sell most of their games
`through the Steam Store and pay Valve a 30% commission on most sales. Valve also imposes
`pricing restraints that inflate prices across the market in order to protect Valve’s monopoly
`position and power in the relevant markets. Through these restraints, Valve prevents other game
`stores from gaining share by competing with the Steam Store on price. Valve blocks pro-
`competitive price competition through two main provisions—the Steam Key Price Parity
`Provision and the Price Veto Provision.
`Steam Key Price Parity Provision. Valve nominally allows game publishers to
`10.
`make some limited third-party sales of Steam-enabled games through its “Steam Keys” program.
`Steam Keys are alphanumeric codes that can be submitted to the Steam Gaming Platform by
`gamers to access a digital copy of the purchased game within the Steam Gaming Platform, even
`when the game is not purchased through the Steam Store. Steam Keys can be sold by rival
`distributors including the Humble Store, Amazon, GameStop, and Green Man Gaming.
`11.
`But Valve has rigged the Steam Keys program so that it serves as a tool to maintain
`Valve’s dominance. Among other things, Valve imposes a price parity rule (the “Steam Key Price
`
`CLASS ACTION COMPLAINT
`CASE NO. CASE NO. 2:21-CV-563
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`QUINN EMANUEL URQUHART & SULLIVAN
`1109 FIRST AVENUE, SUITE 210
`SEATTLE, WASHINGTON 98101
`TEL: (206) 905-7000
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`Parity Provision”) on anyone wanting to sell Steam Keys through an alternative distributor. Put
`explicitly by Valve, “We want to avoid a situation where customers get a worse offer on the Steam
`store.”3 But that is equivalent to preventing gamers from obtaining a better offer from a
`competing distributor. The effect of this rule is to stifle price competition.
`12.
`Because of this rule, Valve can stop competing game stores from offering
`consumers a lower price on Steam-enabled games in order to shift volume from the Steam Store to
`their storefronts. Even if a rival game store were to charge game publishers a lower commission
`than Valve’s high 30% fee, the distributor would not gain more sales because the game publishers
`could not charge a lower price in its store. Game publishers and consumers suffer because this
`rule keeps Valve’s high 30% commission from being subject to competitive pressure.
`13.
`This Price Parity Provision is one of the reasons why Valve has been able to
`continue to charge an inflated 30% commission for many years, even as that commission is plainly
`above the levels that would prevail in a competitive market. Competition would normally force
`such an inflated commission to come down to competitive levels—but Valve’s restraints prevent
`those competitive forces from operating as they would in a free market.
`14.
`Because of Valve’s restraint, publishers cannot utilize alternative distributors to
`avoid the 30% tax that Valve has set for the market. Thus, they reluctantly market their games
`primarily through the dominant Steam Store where Valve takes its 30% fee. While several
`distributors have tried to compete with Valve by charging lower commissions on Steam Keys,
`those efforts have largely failed to make a dent in the Steam Store’s market share because
`publishers using those distributors had to charge the same inflated prices they set on the Steam
`Store.
`
`15. Moreover, even if a game publisher wanted to scale up its use of Steam Keys to
`promote competition, Valve has made it clear that it would shut down such efforts. When Valve
`recognizes that a game publisher is selling a significant volume of Steam Keys relative to its
`
`
`3 Steamworks Documentation, Steam Key Rules and Guidelines,
`https://partner.steamgames.com/doc/features/keys.
`
`CLASS ACTION COMPLAINT
`CASE NO. CASE NO. 2:21-CV-563
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`1109 FIRST AVENUE, SUITE 210
`SEATTLE, WASHINGTON 98101
`TEL: (206) 905-7000
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`Steam Store sales, Valve can, at its own discretion, threaten the game publisher and refuse to
`provide more Steam Keys. Thus, Valve uses the Steam Key program as another tool to ensure that
`the vast majority of sales take place on the Steam Store, where Valve gets its 30% commission on
`nearly every sale.
`Price Veto Provision. Valve also requires game publishers to agree to give Valve
`16.
`veto power over their pricing in the Steam Store and across the market generally (the “Price Veto
`Provision”). Valve selectively enforces this provision to review pricing by game publishers on PC
`Desktop Games that have nothing to do with the Steam Gaming Platform at all. Through this
`conduct, prices set in the Steam Store serve as a benchmark that leads to inflated prices for
`virtually all PC Desktop Games.
`17.
`As explained by the founder and CEO of Epic Games (“Epic”), one company that
`has tried to compete against Valve, “Steam has veto power over prices, so if a multi-store
`developer wishes to sell their game for a lower price on the Epic Games store than Steam, then: 1.)
`Valve can simply say ‘no.’”4 Valve makes every game publisher accessing the Steam Gaming
`Platform agree to this Price Veto Provision.
`18.
`Valve uses this provision to further enforce price parity and prevent rival game
`distributors from gaining volume by competing on price.5 And by inhibiting rival distributors
`from competing on price—even when selling games that have nothing to do with the Steam
`Gaming Platform—Valve inhibits potential competition against the Steam Gaming Platform as
`well, because rival gaming platforms cannot encourage usage by connecting to lower-priced
`distributors. Valve therefore protects its monopoly position in both of the relevant markets—the
`
`
`4 Tim Sweeney (@TimSweeneyEpic), Twitter (Jan 30, 2019, 9:29 AM),
`https://twitter.com/timsweeneyepic/status/1090663312814157824?lang=en.
`5 This provision could also be considered a “most favored nations” (“MFN”) provision, which
`are often unlawful. A typical MFN provision would mandate that publishers sell their games for
`prices that are equal or higher than the Steam Store price on other storefronts. Valve’s provision is
`even worse because Valve can veto or review pricing for any reason at all.
`
`CLASS ACTION COMPLAINT
`CASE NO. CASE NO. 2:21-CV-563
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`QUINN EMANUEL URQUHART & SULLIVAN
`1109 FIRST AVENUE, SUITE 210
`SEATTLE, WASHINGTON 98101
`TEL: (206) 905-7000
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`markets for PC Desktop Game Distribution and PC Desktop Gaming Platforms—through this
`provision.
`In addition to its tie between the Steam Gaming Platform and the Steam Store, and
`19.
`these contractual provisions, Valve has engaged in a number of other anticompetitive acts which
`further cement its dominance and increase its anticompetitive toll.
`20.
`For example, Valve has set up visibility in its Steam Store to focus on games that
`are nominally “on sale” to gamers. Knowing that the best way to reach their audience is through
`discounting, game publishers must artificially inflate their list prices so they have headroom for
`discounting. But the “sale” price is not consistently available, and therefore some gamers pay an
`artificially inflated list price for the game. These supracompetitive prices increase Valve’s cut,
`force gamers to overpay, and prevent publishers from setting the most efficient game prices they
`could in the first place. Even worse, these supracompetitive prices are transmitted across the
`broader market by the contractual restraints discussed above.
`21.
`Ultimately, the only way for game publishers to avoid Valve’s anticompetitive
`scheme is to avoid the Steam Gaming Platform altogether, and not sign any agreements or
`contracts with Valve. But time and time again, when publishers or other market participants have
`tried to create or utilize alternative PC Desktop Gaming Platforms, they have failed to obtain
`sufficient scale to challenge Valve because of Valve’s dominance and anticompetitive restraints.
`These failed efforts include ones by the largest gaming and technology companies in the world,
`such as Electronic Arts (“EA”), Microsoft, Amazon, and Epic. The failure of these deep-pocketed
`companies is instructive, showing that Valve’s monopoly power in both the PC Desktop Gaming
`Platform (through the Steam Gaming Platform) and PC Desktop Game Distribution (through the
`Steam Store) markets is durable and virtually impossible to overcome given the conduct
`challenged in this action.
`22.
`At bottom, Valve’s scheme imposes a massive tax on the PC Desktop Gaming
`industry. Game publishers are forced to use the Steam Store and give Valve 30% of nearly every
`sale if they want to gain access to the Steam Gaming Platform—access they need in order to sell
`
`CLASS ACTION COMPLAINT
`CASE NO. CASE NO. 2:21-CV-563
`
`6
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`QUINN EMANUEL URQUHART & SULLIVAN
`1109 FIRST AVENUE, SUITE 210
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`TEL: (206) 905-7000
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`their games. In order to afford Valve’s 30% commission, game publishers must raise their prices
`to consumers and can afford to invest fewer resources in innovation and creation. Gamers are
`injured by paying higher retail prices caused by Valve’s high commissions. Competition, output,
`and innovation are suppressed, in ways that can never be fully redressed by damages alone. Thus,
`in addition to damages, injunctive relief removing Valve’s anticompetitive provisions is necessary
`to bring competition to the market and benefit the public as a whole.
`PARTIES
`Defendant Valve Corporation is a Washington Corporation with a principal place
`23.
`of business at 10400 NE 4th ST, Suite 1400, Bellevue, Washington, 98004-5174. Valve, an
`American video game developer, publisher, and digital distribution company, operates a PC
`Desktop Gaming Platform (the “Steam Gaming Platform”) and a PC Desktop Game Distributor
`(the “Steam Store”). As discussed herein, the Steam Store extracts an anticompetitive fee of 30%
`from nearly every computer game sold in the United States.
`24.
`Plaintiff Wolfire Games, LLC (“Wolfire Games”) is a video game publisher
`headquartered in San Francisco, California. Wolfire Games has entered into Steam Distribution
`Agreements with Valve to make Wolfire Games’ PC Desktop Games compatible with the Steam
`Gaming Platform, and to sell its PC Desktop Games through the Steam Store. As a result of
`Defendant’s anticompetitive practices, Wolfire Games has paid supracompetitive commissions to
`Valve for each sale of its PC Desktop Games through the Steam Store.
`25.
`Plaintiff William Herbert is a resident of Florida. Mr. Herbert has purchased PC
`Desktop Games through the Steam Store. As a result of Defendant’s anticompetitive practices,
`Mr. Herbert has paid supracompetitive prices for PC Desktop Games.
`26.
`Plaintiff Daniel Escobar is a resident of New York, New York. Mr. Escobar has
`purchased PC Desktop Games through the Steam Store. As a result of Defendant’s
`anticompetitive practices, Mr. Escobar has paid supracompetitive prices for PC Desktop Games.
`
`CLASS ACTION COMPLAINT
`CASE NO. CASE NO. 2:21-CV-563
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`1109 FIRST AVENUE, SUITE 210
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`TEL: (206) 905-7000
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`JURISDICTION AND VENUE
`Plaintiffs bring this action under Sections 4 and 16 of the Clayton Act, 15 U.S.C.
`27.
`§§ 15 and 26, to recover treble damages and costs of suit, including reasonable attorneys’ fees,
`against Defendant for the injuries to Plaintiffs and the Class, alleged herein, arising from
`Defendant’s violations of Section 2 of the Sherman Act, 15 U.S.C. § 2, and Section 1 of the
`Sherman Act, 15 U.S.C. § 1. Plaintiffs also assert claims under Washington’s Consumer
`Protection Act, RCW 19.86, seeking treble damages and injunctive relief under RCW 19.86.090.
`28.
`The Court has subject matter jurisdiction over this action pursuant to Sections 4 and
`16 of the Clayton Act, 15 U.S.C. §§ 15(a) and 26, as well as pursuant to 28 U.S.C. §§ 1331 and
`1337(a). The Court has supplemental jurisdiction over Plaintiffs’ state law claims pursuant to 28
`U.S.C. § 1367.
`29.
`This Court has personal jurisdiction over Valve because Valve’s headquarters are
`located in Bellevue, Washington. Valve has engaged in sufficient minimum contacts with the
`United States and has purposefully availed itself of the benefits and protections of both United
`States and Washington law such that the exercise of jurisdiction over Valve would comport with
`due process. Valve also has entered into agreements with publishers and consumers that require
`related disputes to be litigated in this District.
`30.
`Valve also is subject to personal jurisdiction because either directly or through its
`agents or affiliates Valve transacted business throughout the United States, including in this
`District, that was directly related to the claims at issue in this action.
`31.
`Additionally, the Court has jurisdiction over Valve because it has its principal place
`of business in Washington State.
`32.
`Venue is proper in the United States District Court for the Western District of
`Washington because Defendant Valve consented to being sued in this District.
`33.
`Venue is proper in this District pursuant to 15 U.S.C. §§ 15(a) and 22 because
`Valve is found in and transacts business in this District.
`
`CLASS ACTION COMPLAINT
`CASE NO. CASE NO. 2:21-CV-563
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`Venue also is proper pursuant to 28 U.S.C. § 1391(b), (c), and (d) because, during
`34.
`the relevant period, Valve resided, transacted business, was found, or had agents in this District; a
`substantial part of the events or omissions giving rise to these claims occurred in this District; and
`a substantial portion of the affected interstate trade and commerce discussed herein was carried out
`in this District.
`
`I.
`
`FACTUAL ALLEGATIONS
`OVERVIEW OF PC DESKTOP GAMING AND VALVE
`35.
`A video game is an electronic game that can be played on a computing device, such
`as a PC, gaming console, tablet, or mobile phone. As of 2021, there are roughly 3 billion video
`game players worldwide.
`36.
`Video games are subcategorized by the type of device on which gamers play them,
`including computer games (e.g., PC games), console games (e.g., PlayStation or Xbox games),
`and mobile games (e.g., games played primarily on a smartphone or tablet device). Any game
`developed for particular gaming hardware will work only for that hardware (e.g., a PC game will
`work only on a PC), and, as detailed below, different versions of PC games are often also created
`for specific PC Desktop Gaming Platforms, like the Steam Gaming Platform.
`37.
`PC Desktop Games are video games that are downloaded and installed onto a PC
`device. Although such games vary in size, scope, type, and features, they all involve the ability to
`load the game directly from the user’s computer and then allow the user to play the game from that
`computer. All require installation on the user’s PC to work, and all save data on the user’s PC,
`both for the purposes of running the game, as well as for saving game progress or preferences
`(such as control schemes, sound and video preferences, etc.).
`38.
`PC Desktop Games are almost as old as PCs themselves. PCs first came to
`prominence in the 1980s and, at that time, numerous game publishers released games for this new
`type of computing device. As PCs’ popularity grew, so, too, did the popularity of PC Desktop
`Games. In 2020, the revenue from the worldwide PC Desktop Gaming Market was at least $30
`billion.
`
`CLASS ACTION COMPLAINT
`CASE NO. CASE NO. 2:21-CV-563
`
`9
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`QUINN EMANUEL URQUHART & SULLIVAN
`1109 FIRST AVENUE, SUITE 210
`SEATTLE, WASHINGTON 98101
`TEL: (206) 905-7000
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`Case 2:21-cv-00563-JCC Document 1 Filed 04/27/21 Page 12 of 78
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`Due to memory constraints on early PCs, early PC Desktop Games were originally
`39.
`stored almost entirely on disks, such as floppy disks or, later, plastic optical disks. As PC hard
`drives and internal memory grew in size, however, while games came on disks, the user could
`install a large number of files directly on their PC to allow the game to run better and smoother.
`Over time, storage and memory technology improved exponentially on both the PC and disk level,
`and PC Desktop Games grew substantially in size. Eventually, most PC Desktop Games came on
`CDs or DVDs.
`40.
`For most of the history of the PC Desktop Game industry, gamers bought PC
`Desktop Games at brick-and-mortar locations, such as electronics stores, because the internet did
`not exist when publishers first sold PC Desktop Games. Even after the internet became broadly
`available, download speeds were initially so slow that obtaining PC Desktop Games digitally
`online proved impractical.
`41. When internet speeds increased exponentially, video game publishers began
`distributing their games digitally. Unlike physical copies, when games are purchased digitally
`consumers can download the game directly to their PC. There is no need to visit a physical
`distribution outlet and obtain physical media for the game. Today, the substantial majority of PC
`Desktop Game sales are digital, through digital distributors (of which the Valve Steam Store is the
`undisputed dominant player, discussed below).
`A.
`Overview of the Relevant Markets
`42.
`In addition to publishing its own PC Desktop Games, Valve competes in two
`separate but related relevant economic markets—the market for PC Desktop Game Distribution
`and the market for PC Desktop Gaming Platforms. In the market for PC Desktop Game
`Distribution, distributors intermediate transactions between game publishers and gamers, allowing
`gamers to purchase PC Desktop Games from publishers. In the market for PC Desktop Gaming
`Platforms, competing platforms provide a local and online space where gamers can play, maintain,
`communicate with others, and track progress and achievements on their PC Desktop Games.
`These platforms also provide important social networking features generally. While multiplayer
`
`CLASS ACTION COMPLAINT
`CASE NO. CASE NO. 2:21-CV-563
`
`10
`
`QUINN EMANUEL URQUHART & SULLIVAN
`1109 FIRST AVENUE, SUITE 210
`SEATTLE, WASHINGTON 98101
`TEL: (206) 905-7000
`
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`Case 2:21-cv-00563-JCC Document 1 Filed 04/27/21 Page 13 of 78
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`games were popular before the COVID-19 pandemic, cooperative online gaming and socializing
`through gaming has surged as Americans of all ages have socialized on gaming platforms.
`1.
`PC Desktop Games
`Both relevant markets have their contours defined by PC Desktop Games. PC
`43.
`Desktop Games are a distinct set of video games that are not interchangeable with other types of
`video games, including console games and mobile games.
`44.
`Video games are generally developed for specific hardware systems, like PCs or
`consoles. Versions or editions of video games that are designed for specific hardware systems do
`not function on alternative hardware systems. For example, a PC Desktop version of a game will
`not function on the PlayStation. Game developers and publishers incur costs when trying to port
`their games from one hardware system to the other, including development costs, organizational
`costs, and quality control costs.
`45.
`Nonetheless, some publishers develop different versions of the same game for
`different hardware systems. But even for games that are implemented across multiple hardware
`systems, the hardware-specific versions of those games are not interchangeable, meaning an Xbox
`version of a game is not interchangeable with a PC version of a game.
`46.
`First, gamers make conscious choices about which hardware systems to utilize, and
`experience lock-in effects caused by their systems of choice. For example, a gamer that owns an
`Xbox along with several Xbox accessories such as controllers cannot use the PlayStation edition
`of a game without duplicating all of their hardware purchases. In this regard, a major advantage
`and differentiator for the PC as a hardware system is that most people have access to a PC already
`due