In 2021, Wolfire Games sued Valve under antitrust laws. This has led to a long legal battle, which is still ongoing, and has had enormous ramifications that, depending on how it is resolved, could have significant consequences for Gabe Newell’s company. Worse now, thanks to Bloomberg, we have statements from Newell himself after he testified in court in 2023 about the idea that Valve is a monopoly. Demonstrating that he either does not know what a monopoly is or has good lawyers.
The discussion about what a monopoly is
“Users have a huge number of options,” he said about the possibility of where to buy games. “Whether it’s buying a game on Xbox, buying it on Steam, buying it on the Epic Games Store, or buying it directly from software developers,” thus denying that there is any kind of monopoly by Valve due to the existence of other possibilities in the market.
The problem is that the market does not work that way. Monopoly does not mean that a single company controls the market, with no competition at all, but something much more subtle: monopoly is when a company has the ability to control the market, whether or not there are other companies selling the same products or services.
In fact, that is what is being studied in court and what they are being accused of. David Rosen, founder of Wolfire Games, accused Steam of that, when trying to lower the price of his game Overgrowth in other stores, Steam “responded by saying they would remove Overgrowth from Steam if I allowed it to be sold cheaper anywhere else, even on my own website without Steam keys and without Steam DRM”. This makes Newell’s defense not only weak but also counterproductive.
Although Newell has denied that this rule exists, stating that “Valve does not have a policy or practice of dictating the prices of software developed by third parties on other platforms“, it also does not deny that they will remove such software if certain specific conditions are not met.
While it doesn’t seem that the trial will conclude soon, it could have significant ramifications for Valve. In addition to the antitrust actions that could be taken against Valve and the compensation that could be awarded to Wolfire Games, another lawsuit in the UK for $900 million for violation of consumer rights is closely tied to the success of this case. Therefore, Valve is very interested in winning this lawsuit. Because if it doesn’t, it could find itself in trouble.
