18:05
Steam. The largest game distributor on earth. 74% market share of PC gaming, 17 billion in annual revenue, over a hundred million users. And, it seems like everyone is suing them. Lawsuits on top of lawsuits. Accusations of being a monopoly, and price steering. With one seeking $900 million. But, the weirdest part is that customers love Steam. Despite being the big bad monopoly, players go to war on Steam's behalf. Why do competitors seem to hate Steam, and customers love it? Is Steam really a monopoly?
Steam is a gigantic digital store, library, and game launcher used by hundreds of millions. It's owned and run by Valve. Steam has over 130 million monthly active users, 69 million daily active users, and has over 40 million concurrent users. And they're in a lot of hot water, especially recently. With some serious accusations. There are quite a few lawsuits involving Valve, but there's a series of cases circling one thing: Steam breaching antitrust laws. The most important part to understand, is that, broadly, Valve takes 30% from all sales on Steam. 30% of revenue. The same as Apple and Google Play, and GOG, while Epic Games, the Microsoft Store take 12%. But it's not the only reason for Valve's many lawsuits.
One of the biggest is from Vicki Shotbolt vs Valve, which was filed on behalf of 14 million UK Steam consumers. The claim is seeking £656 million, about $900 million. Why? That 30% cut, which they call "excessive". But also, accusations of "anti-steering". A product bought on Steam with in-game purchases must be done through Steam's API, and thus, Valve's 30% cut. But the bigger accusation is around price parity. Prices on other platforms are the same as Steam. Sounds normal, but they have the platforms taking a different cut. 30%, or 12, or something else. But prices aren't different because Valve quietly enforces "Platform Parity Obligations". Which has caused another lawsuit from developer: Wolfire Games
"On December 3, 2018, Steam account manager reportedly told publisher Wolfire Games that Steam would delist any games available for a lower price elsewhere" This included platforms where the revenue split is lower, which could be the only reason for the lower price. The core allegation is that "Valve uses its dominance over PC game distribution to impose a 30% commission on nearly every sale and - critically - to enforce a "Platform Most Favored Nation" rule that the plaintiffs say prevents developers from selling the same game more cheaply on competing stores or even on their own websites." "This 30% commission yields Valve over $6 billion
dollars in annual revenue. For everyone else, it yields higher prices and less innovation." [David Rosen, CEO of Wolfire]: "most developers have little or no choice but to sell on Steam and do as they're told by Valve. I believe that businesses are free to do whatever they want within the law. However, once a company reaches a certain level of power over an entire market, the antitrust laws forbid those companies from distorting competition." "As Valve itself told one game publisher, Valve "can't afford" to let competing platforms sell games more cheaply than Steam because "[t]hat would only lead to our audience
and the public thinking we are overpriced and there are better alternatives to find games." Valve denies enforcing this, though files that have come out of this lawsuit, have brought even more problems, which has also dragged Microsoft into this. A proposed class action filed in May 2026 alleges Microsoft entered an unlawful agreement with Valve requiring "price parity" between the Microsoft Store and Steam. This was based on an internal Microsoft email, where "one employee asks whether Steam requires price parity, and in response, another Microsoft employee replied 'Yes - they absolutely do…
It's not formally listed in documentation in Steamworks, but always addressed in person." The complaint argues that "By choosing to collude rather than compete, Microsoft deprived consumers of the benefits of competition: lower prices, increased output, unique content selection, and higher quality" There are also accusations, that Valve has reportedly threatened major publishers such as Ubisoft with delisting games like Rainbow Six Siege if they attempted to offer lower prices on competing storefronts. In response, CEO Gabe Newell denied any existence of such rules, and said " Valve does not have a policy or practice of dictating prices to third-party software developers on other platforms." That's a lot of pretty strong accusations.
And on the sidelines of pretty much every lawsuit, is one of Valve's most vocal critics, Tim Sweeney, CEO of Epic Games. Creator of the Unreal Engine, and most notably: Fortnite. "Valve is the only major store still holding onto the payments tie and 30% junk fee' He has quite a few tweets about Steam. To be fair to Tim, he isn't singling out Valve. He went after Apple for demanding 30% on the App Store. Steam and Valve seem to be the bad guys here. But, this whole thing, is a bit more murky than you might think. Players, love, Steam.
And they're inherently untrusting of all their competitors, including Tim. So what makes Valve and Gabe Newell different? Not only that, can't so many, sometimes bigger competitors, beat Steam? Tim Sweeney's Epic, EA, Microsoft, Amazon, Discord, Battle.net, Ubisoft, Humble, GOG and Green Man Gaming, can't seem to beat Steam. Even those with way, way more money. What's really going on here? If we just look at the accusations and the lawsuits, it does seem like Valve is at fault. And, they very well might be. I'm not saying they've done nothing wrong. But this gets weirder when you look at what Steam represents.
Steam is famous for its fantastic value and constant sales. It's not uncommon for your favourite game, if it's not brand new, to be on sale for 50%, 70%, even in some cases 90% off. Better deals than you can get anywhere else. And ironically, one of the best arguments for Steam, actually comes from Epic. Epic Games has been trying to pull players from Steam for a while. $2 billion in promotional spending, after 6 years, Epic Games Store has… 3% of the market. And did I mention that Epic has been giving away free games to get new users? That's right. Epic literally gives games away for free, and people will still use
Steam. Not only that, "Internal analyses suggest only 16-18% of free-game claimers ever purchase a title on the store." Massive games like Metro Exodus, Borderlands 3, and many other titles are only on the Epic Game store. Metro was actually listed on Steam, before being pulled right before launch, after Epic paid the publisher to do so. They also paid $146 million for Borderlands to be an exclusive. Customers, weren't happy. Ironically, when Borderlands 4 came out a few years later, it returned to Steam, with the CEO saying "my long term hope regarding Epic's store were misplaced or overly optimistic."
Now we're starting to uncover part of the answer. Tim Sweeney keeps yapping about Valve being "unfair to consumers", then pays publishers to pull products from other stores, so customers come to the Epic Games Store… Sure doesn't sound very "pro consumer". But there's more. Most of these third party platforms… suck. Ubisoft Connect, the EA App, Amazon Prime Gaming, they often feel clunky, their selection is much smaller, and people don't enjoy the experience. Even Amazon, with their basically infinite money, couldn't beat Valve, who's a fraction of the size. [Ethan Evans, VP of Prime Gaming at Amazon]: We failed multiple times to disrupt the game platform Steam. We were at least 250x bigger,
and we tried everything. But ultimately, Goliath lost. At Amazon, we assumed that size and visibility would be enough to attract customers, but we underestimated the power of existing user habits. We never validated our core assumptions before investing heavily in solutions. The truth is that gamers already had the solution to their problems, and they weren't going to switch platforms just because a new one was available. We needed to build something dramatically better, but we failed to do so." These are so bad, that publishers will force customers to launch games through these platforms, even if the game is listed on Steam.
Players… hate these things. Hate them. We can see more and more, that those who want Valve gone, don't actually care about player choice. They care about having a bigger slice of the pie. "the Rothschilds, Microsoft Xbox, Nintendo and Sony PlayStation are the ones that benefit if Steam goes belly up, we the consumers lose, as the biggest competitor would be eradicated." Antitrust protects competition, not consumers. Can it lead to better value for consumers? Absolutely. But this is where a lot of people have become suspicious.
"If Valve is enforcing price parity, then that limits real competition, and removing that restriction would let other stores offer lower prices. Ok. But I think people should be realistic about what happens next. This does not mean publishers will suddenly become generous and start selling $70 games for $50. Publishers would still use Steam's infrastructure for exposure, wishlists, then tell people to buy from their own platform for a tiny discount or some exclusive digital items. Maybe the game is $5 cheaper, or maybe it is the same
price but comes with bonus skins or currency." I don't think many of these people and companies care much about the free market and consumers. Many of them, want Valve out of the way. But, there's still a bigger question. Why won't players leave Steam for Epic, even when given games for free? Why do people trust Valve? Even if they seem to be preventing lower prices? We need a bit more context. In 1998, Valve released their very first game. Half Life. One of the most revered video games ever made. From Valve came many games with incredible quality and polish. Portal 1 and 2, Team Fortress one and 2,
Counter-strike, along with sequels Source, Global Offensive and 2, Left 4 Dead one and two, Dota 2. Note that many of these were first made by fans as mods, who were hired by Valve to flesh out these projects. So why does this matter? For one important reason. Steam was built, and is owned by people who are their customers. Steam isn't a public company, it's private. And the majority is owned by Gabe Newell. Originally, in 2003, Steam was just a platform to sell Valve's games, then in 2005, it became a home for third party titles. The Epic Games store didn't launch till 13 years later.
Epic is also private, but the majority is owned by large conglomerates: Tencent, Disney, Sony, etc. "I don't know how many people remember this, but Steam practically rescued PC gaming in the late '00s. The 7th gen was a nightmare for PC gaming; gaming was in the clutches of the big publishers, who were focusing almost exclusively on consoles. Steam centralized the market and started the sales and in record time, the market shifted. Steam democratized video game releases. Steam won, because it was great, and part of that is Valve's impeccable customer support.
Play a game and find it sucks? Or maybe you just don't like it? If you bought it less than two weeks ago, and played under two hours, you'll get a full refund, no questions asked. Not all platforms are this generous. It's not just Steam games either. There are stories upon stories of Valve customer support going above and beyond. "Steam replaced my LCD Deck for free months after purchase because I told them it crashed while playing Ark Survival as well as Spider-Man, then got stuck at 400mhz.
They wouldn't even take no for an answer, immediately wanted to replace it for me." Then there's family sharing. Share your library with someone else, who can play your games, for free, without buying them. As long as you aren't using them at the same time. This first released in 2013. All this goes beyond gaming too. They have their own operating system, SteamOS, which is free, and Linux-based. This is why a SteamDeck or Steam Machine also functions as a PC. Steam also strongly encourages regional pricing in emerging markets, like Brazil, Russia, or Southeast Asia. Steam's recommended price is 40-70% below
the USD price, so they try to reflect what that game would cost relative to local income. Steam even penalizes games in discovery if they don't apply these prices. Steam has also banned in-game advertising "If your game's business model relies on advertising on other platforms, you will need to remove those elements before shipping on Steam". Steam also forces developers to disclose uses of AI in development. Which of course, Tim Sweeney finds upsetting… [Tim Sweeney]: "I think it's really irresponsible of Valve. They shouldn't do it, because it makes it much, much, much harder for a game developer
to have a chance of success" Sure Tim. Examples on top of examples of features that might annoy big companies, but are very pro-consumer. Even beyond all these examples, if you search "Why is Steam / Gabe Newell beloved" you'll find long, detailed posts and stories. Their practices are great, but Valve has decades of goodwill. From making games to supporting those games. For example, their massive prize pools for esports tournaments, like Counterstrike or Dota 2. And then, there's Gabe Newell. People trust Valve, because they trust the people at the top. His email has been public for years, and he
consistently replies to customers, about anything. He's been pretty open and honest with customers. Valve is one of the highest paying companies in the world, But also, makes some of the most revenue per employee, and seem to pay those employees very well. And let me be clear: Valve is a for profit company. They are out to make money. But they understand the most important part of the equation. Customer service. Is Valve perfect? No. A lot of these lawsuits are still ongoing. Steam might be doing something wrong by fixing horizontal prices, and forcing the same prices everywhere, but I'm unsure if this will turn into cheaper prices.
I don't think Steam is a normal monopoly. [Mat Piscatella]: Market share isn't what defines a monopoly, folks. A monopoly is where there's a single seller for a particular service or good with no substitutes and the ability to charge excessively high rates because of this. Anyone can launch a PC distribution service, and there have been A LOT of them. But, I sure trust Valve a heck of a lot more than I do Tim Sweeney and Epic Games. In a world of so many greedy companies, I don't mind a company like Valve having control. Because they got there by offering the best service.
What's interesting is that Steam very much isn't the only ones with the "30%" cut. Apple's App store does the same thing, though… with some more questionable practices. And without Steam's goodwill. This was another battle of Tim Sweeney's, and the outcome of this one changed everything. Click here to learn the rest of the story.
