EU Commission is opening investigation in Valve for geo-blocking Steam keys

Dascu

Member
http://europa.eu/rapid/press-release_IP-17-201_en.htm

Video games
The Commission is investigating bilateral agreements concluded between Valve Corporation, owner of the Steam game distribution platform, and five PC video game publishers, Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax. The investigation concerns geo-blocking practices, where companies prevent consumers from purchasing digital content, in this case PC video games, because of the consumer's location or country of residence.

After the purchase of certain PC video games users need to confirm that their copy of the game is not pirated to be able to play it. This is done with an "activation key" on Valve's game distribution platform, Steam. This system is applied for a wide range of games, including sports, simulation and action games.

The investigation focuses on whether the agreements in question require or have required the use of activation keys for the purpose of geo-blocking. In particular, an "activation key" can grant access to a purchased game only to consumers in a particular EU Member State (for example the Czech Republic or Poland). This may amount to a breach of EU competition rules by reducing cross-border competition as a result of restricting so-called "parallel trade" within the Single Market and preventing consumers from buying cheaper games that may be available in other Member States.

The Commission is carrying out this in-depth investigation on its own initiative.

This means DG COMP will be contacting the relevant companies to ask for information. In case they do not agree with Valve et al., DG COMP could formally accuse them for market abuse and distortionary practices and start a law suit.

It was only just announced today, expect the gaming news sites to pick up on this later.
 
So... it could it to no more EU tier countries keys, right ?
The problem is... would it mean higher prices for smaller countries ?
 

Dascu

Member
So... it could it to no more EU tier countries keys, right ?
The problem is... would it mean higher prices for smaller countries ?

Valve and publishers on Steam are allowed to do price differentiation, but they cannot block people from buying keys online from one Member State and then activating that on Steam in their own Member State.

That said, this is an investigation to see whether:
- Valve and those publishers indeed have been doing this.
- That's something that might've been part of clauses in contracts between Valve and those publishers.
- If there's any potential justifications.

It can also work retroactively: The Commission can sue them for breach of EU law for practices that may have ended by now. It was never OK to block consumers from buying goods in different Member States.
 

wazoo

Member
So... it could it to no more EU tier countries keys, right ?
The problem is... would it mean higher prices for smaller countries ?

Not necessarly. EU rules means that you should be able to buy from everywhere at different prices.

But .. The problems with digital goods is that the barrier is too low, buying is too easy, shipping costs are non existant and so on.



The end result would probably be uniform price over europe as a retaliation from Valve, which is ont something EU can say anything against.
 
ZeniMax definitely did something fishy with Dishonored 1 and Fallout NV keys in Poland - I imagine that this was on request of Cenega - though how does that qualify legally is another issue. I imagine that EU's office's rationale about Valve is that they should have played the cop themselves and block ZeniMax from doing it.
 

Theonik

Member
The end result would probably be uniform price over europe as a retaliation from Valve, which is ont something EU can say anything against.
But then Valve would lose sales from those tier 2 countries. The end result will probably mean we get something in between which is good depending on where you are.
 

madjoki

Member
Sad for people living in countries getting cheaper keys.

Well there is no more EU2 region and most countries in Europe now have same price.

Valve still allows per country pricing. So publishers may choose to implement EU2 pricing that way. I think there's like one or two games that use this. Don't remember names tho.
 

Nzyme32

Member
i thought the game publishers choose whether to "geo-block", not valve

They do, but Valve does enable that and support it, so it depends how that is seen by the EU commission. I can understand it for certain regions where they want to be able to push a lower price but avoid that being exploited when this is a necessary measure for such regions to afford it - but it also is quite a grey area
 

Lime

Member
They should also investigate how Valve using Luxembourg as a tax haven. (EA also does the same)
 

Nzyme32

Member
They should also investigate how Valve using Luxembourg as a tax haven. (EA also does the same)

Most companies do this with tax havens when operating globally. See also the ROI and Apple though this is much more disturbing as it is a specific agreement for them giving them preferential treatment
 

Dascu

Member
ZeniMax definitely did something fishy with Dishonored 1 and Fallout NV keys in Poland - I imagine that this was on request of Cenega - though how does that qualify legally is another issue. I imagine that EU's office's rationale about Valve is that they should have played the cop themselves and block ZeniMax from doing it.

I think what DG COMP mainly wants to find out here is: Were there contractual obligations in the Steam publishing agreements between Namco/ZeniMax/etc. and Valve that forced Valve to not allow people to activate keys from certain EU Member States purchased from another Member State?

If this is the case, then that is a clear breach of the EU single market.

This doesn't necessarily lead to one single price for a game across the EU. That would be a decision by the publishers if they want to do the math on potential lost sales (e.g. people in Poland buying less games) versus full-price sales (e.g. people from Belgium buying them full-price instead of getting them via a Polish key re-seller).

I think in the most part the situation will not change on that front. Publishers stand to lose more sales by forcing a (higher) uniform EU price than they do by tackling the various key re-selling circuits.

They should also investigate how Valve using Luxembourg as a tax haven. (EA also does the same)
DG COMP has literally thousands of tax rulings (LuxLeaks, SwissLeaks, various others) on their plate. They're going after the big fish (Amazon, Apple, McDonalds and recently ENGIE).
 

Nikodemos

Member
It's not about differentiate pricng (which is OK by EU rules), it's about not allowing content bought from another marketplace to be activated on your local account which displays a different region ID.

Basically, say you buy a key in France and try to activate it in Estonia (or vice-versa), only to get an error message. That is a big no-no to the EU.
 

Peccavi

Member
Most likely would mean the same (high) price everywhere. Companies reduce prices in poorer countries because it allows them to sell more copies and make more money, but without the ability to discriminate they stand to make less money if everyone buys at the poor country price.
 
Keep on fighting the good fight, EU.

On the flip side, this will probably lead to higher prices in poorer EU countries in those cases, where different prices exist(ed).
 

Theonik

Member
Keep on fighting the good fight, EU.

On the flip side, this will probably lead to higher prices in poorer EU countries in those cases, where different prices exist(ed).
Only if publishers wish to lose those sales entirely. There is no problem with EU price discrimination in the EU's eyes. The problem is breaking free trade barriers.
 

Lashley

Why does he wear the mask!?
Valve will just set a fixed price for all of Europe, which will fuck over smaller countries.
 

madjoki

Member
They should also investigate how Valve using Luxembourg as a tax haven. (EA also does the same)

Valve stopped that actually.

Valve will just set a fixed price for all of Europe, which will fuck over smaller countries.

Valve doesn't set prices, but publishers. But it does already default to single fixed EU price for about a year.

Only if publishers wish to lose those sales entirely. There is no problem with EU price discrimination in the EU's eyes. The problem is breaking free trade barriers.

At least Zenimax / Bethesda doesn't really care.

I wonder how EU would consider leaving English language out? That would effectively prevent reselling too.
 

Ogawa-san

Member
The problem is... would it mean higher prices for smaller countries ?
Valve will just set a fixed price for all of Europe, which will fuck over smaller countries.
Yup.

Not in EU, but this kind of stuff is why I weep every time I see Nuuvem mentioned here or reddit. Eventually publishers will snap and just set the same prices for everyone again, and then we'll go back to having games costing more than 10% of the average (not minimum) wage.
 

Shiggy

Member
Yup.

Not in EU, but this kind of stuff is why I weep every time I see Nuuvem mentioned here or reddit. Eventually publishers will snap and just set the same prices for everyone again, and then we'll go back to having games costing more than 10% of the average (not minimum) wage.

And then we'll see piracy rise again.
 
If you want to sell cheap games in Poland, just make sure the games are in Polish only.

Problem solved? Or does this violate another EU rule?
 

opricnik

Banned
If this happens im quiting Steam and never buying PC games again. Steam is only place i can buy games financially.
 
The investigation focuses on whether the agreements in question require or have required the use of activation keys for the purpose of geo-blocking. In particular, an "activation key" can grant access to a purchased game only to consumers in a particular EU Member State (for example the Czech Republic or Poland). This may amount to a breach of EU competition rules by reducing cross-border competition as a result of restricting so-called "parallel trade" within the Single Market and preventing consumers from buying cheaper games that may be available in other Member States.

My my, seems like "grey market" sellers aren't actually the ones breaking the law.
 

Vintage

Member
If you want to sell cheap games in Poland, just make sure the games are in Polish only.

Problem solved? Or does this violate another EU rule?

What about Lithuania and many other countries that have lower economy, but no games are translated to their language?
 

Nabbis

Member
Overall a positive thing. It's a global world now, screw corporate protectionism and let consumers get their own benefits from this. In the long run this is far better despite some publishers throwing a tantrum and putting the same price on the whole EU.
 
Just great - we can say goodbye to cheaper games in Eastern Europe or we will be getting shitty regional languges only+Russian only versions without English.

Great job EU
 

Shiggy

Member
If this happens im quiting Steam and never buying PC games again. Steam is only place i can buy games financially.

Don't worry. Turkey is not going to join the EU in the foreseeable future (if the country listed in your profile is correct).
 

madjoki

Member
My my, seems like "grey market" sellers aren't actually the ones breaking the law.

Edit: Seeems like it was overtuned by higher court: see this post http://www.neogaf.com/forum/showpost.php?p=229566729&postcount=40

It's legal, as long as they send you physical box instead of key. If they send just key, it's illegal.

According to the court, the doctrine of exhaustion, which permits the resale of individual physical copies of a copyrighted work that the copyright owner or their licensees have intentionally put onto the market within the EU, did not grant merchants the right to separate different components sold as one product – in this case the physical data medium and the license key.
 

Theonik

Member
I wonder how EU would consider leaving English language out? That would effectively prevent reselling too.
There would be nothing wrong with that so long as there is no restrictions with importing it from another member state.
 

Sini

Member
Just great - we can say goodbye to cheaper games in Eastern Europe or we will be getting shitty regional languges only+Russian only versions without English.

Great job EU
Yeah, this already happened with Borderlands 2, they didn't even let us play with friends outside of our region. They added real versions later after outcry, but it shows what publishers would do.
Scary news.
 

Nzyme32

Member
Overall a positive thing. It's a global world now, screw corporate protectionism and let consumers get their own benefits from this. In the long run this is far better despite some publishers throwing a tantrum and putting the same price on the whole EU.

It isn't as clear cut as that. Countries in the EU, not using the Euro, will have a different currency that will be of different value. Poland for example uses zloty, much lower valued than euro. Valve lets pubs decide if they want to employ a reduced price to suit the economics of that country so its users can actually afford the game in the first place. Without geoblocking, everyone will exploit that price, probably not sustainable or at least much worth to said companies. The other option is to employ a singular price, Poland would get screwed over, people can't afford the game, increased piracy that eventually affects all markets.

Pretty sure that this will be successfully challenged by the EUC, but that won't benefit the lower currency countries at all.
 

Shiggy

Member
Yeah, this already happened with Borderlands 2, they didn't even let us play with friends outside of our region. They added real versions later after outcry, but it shows what publishers would do.
Scary news.

Yeah - we had a situation where one of publishers was selling regional version of Fallout 3 (some rpg not 100% if this one) then they were selling DLC - but they translated only some of DLC - and it turned out that regionalised version will not work with DLC sold through steam.
 
Go and read the various grey market CD key threads here. No one on NeoGaf gives a flying fuck about game pricing in poorer countries. Give me mah cheap keys, this backlog ain't getting bigger by itself!
 

Theonik

Member
That was the decision of an inferior court in Germany. That means the decision would have only held up in Germany. And even then, the highest court in Germany decided differently in the end.

http://www.rahaertel.com/2016/03/31/bgh-entscheidet-zum-keyselling/

Keys can be resold as long as the seller destroys the physical copy that is not sent out.
Yes the problem in that case is the potential of selling the game twice once for the physical copy and once for the key which is not possible anyway as the game is useless without the key. Compliance with the order is easy.
 

Nabbis

Member
It isn't as clear cut as that. Countries in the EU, not using the Euro, will have a different currency that will be of different value. Poland for example uses zloty, much lower valued than euro. Valve lets pubs decide if they want to employ a reduced price to suit the economics of that country so its users can actually afford the game in the first place. Without geoblocking, everyone will exploit that price, probably not sustainable or at least much worth to said companies. The other option is to employ a singular price, Poland would get screwed over, people can't afford the game, increased piracy that eventually affects all markets.

Pretty sure that this will be successfully challenged by the EUC, but that won't benefit the lower currency countries at all.

Yeah, it is. It's the only way forward. The ultimate outcome for this is, unless publishers don't like money, is to settle on a sweet-spot that takes into account the profit gained from reduced piracy in relation to the bought product. If the market can't correct itself in a way that makes the games affordable then you simply can't afford it in the first place without putting the cost on the other countries.
 
So... it could it to no more EU tier countries keys, right ?
The problem is... would it mean higher prices for smaller countries ?
Not necessarily. Some speculate it may mean higher prices for some European states like Ukraine or Poland as publishers look to shut out smart Western European consumers. It really depends on how big the impact of grey market is on publishers.
i thought the game publishers choose whether to "geo-block", not valve
Valve enables it even if they take a hands off approach. It would be easier for EU to tell Valve what publishers can and can't do than to go to each publisher.
 

Shiggy

Member
Thanks for update. Is there anything in English?

I don't think so as it purely relates to the German market and is by a German court. International interest is thus relatively limited. And even then, I summed everything up that is really to that court judgment.
 

patapuf

Member
Yeah, it is. It's the only way forward. The ultimate outcome for this is, unless publishers don't like money, is to settle on a sweet-spot that takes into account the profit gained from reduced piracy in relation to the bought product. If the market can't correct itself in a way that makes the games affordable then you simply can't afford it in the first place without putting the cost on the other countries.

There is no scenario where one price works for the whole world or even the whole of EU.

I'm not sure who it helps when people in poorer countries either have to pirate or not play at all.

Certainly not the consumer.

A potential fix could be to stop keytrading as a whole and everyone has to buy through the regional storefront, but i'm sure people want that even less.
 

Nzyme32

Member
Yeah, it is. It's the only way forward. The ultimate outcome for this is, unless publishers don't like money, is to settle on a sweet-spot that takes into account the profit gained from reduced piracy in relation to the bought product. If the market can't correct itself in a way that makes the games affordable then you simply can't afford it in the first place without putting the cost on the other countries.

That isn't even close to a solution. The disparity in cost for Zloty in Poland and typical pricing / wages vs game cost isn't so easily reconciled with other Euro countries unless you drop the price far below every other country. Publishers have the choice, and they won't bite. They haven't done so for pretty much ever and it is perfectly legal for them to make that choice of retaining their profits. In the worst situations, as with Russia prior to locking, pubs will either purposely hike the price higher or not produce the game for the region at all.
 
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