The EU Is Pissed at Steam for Region-Locking Games

Region-locking-when a publisher restricts the sale of a video game in certain markets-is a fact of life in gaming. Sometimes publishers want to avoid a cultural backlash, other times they don't want a game to release in a region it's not localized for. Often, games will have different prices in different regions.

Now, the European Commission has served Valve, which operates the digital games marketplace Steam, and five major video game publishers with formal objections to alleged antitrust violations related to region-locking.

The European Commission alleges that Valve and publishers Bandai Namco, Capcom, Focus Home, Koch Media, and ZeniMax agreed to region-lock activation keys for games to prevent cross-border sales within the European Union. The Commission also alleges that the publishers prevented distributors from selling games outside of set regions.

According to the Statements of Objections, as the Commission's letters are known, "This may have prevented consumers from buying cheaper games available in other Member States," or buying games at all.

The allegation covers some big name video game franchises. Capcom publishes Street Fighter V, and Devil May Cry 5. ZeniMax is Bethesda's parent company, responsible for the Fallout franchise and Doom.

"In a true Digital Single Market, European consumers should have the right to buy and play video games of their choice regardless of where they live in the EU," European Commissioner for Competition Margrethe Vestager said. "Consumers should not be prevented from shopping around between Member States to find the best available deal."

In a statement to Motherboard, Valve Vice President of Marketing Doug Lombardi said that at issue are the activation keys that Steam provides free of charge. These keys allow people to play games on Steam after buying a physical copy from a third party, the EU Commission noted. Steam region-locked these keys at publishers' request, Lombardi said.

For example, someone could buy a physical copy of Street Fighter V from an online retailer in another country for cheaper than they could get it in their home region. To play it on Steam, they would need to redeem a digital activation key, and it's these keys that Steam region-blocked at publishers' request.

"The region locks only applied to a small number of game titles," Lombardi told Motherboard in an email. "Approximately just 3% of all games using Steam (and none of Valve's own games) at the time were subject to the contested region locks in the [European Economic Area]."

The EU's regulations around unjustified geo-blocking came into force in 2018 and cover games released on physical media, but not digital downloads. The regulation is due for a review in 2020. The Statements of Objections stem from an investigation into Valve and the five publishers that began in 2017, according to the Commission.

Lombardi claimed that the EU has actually been looking into Valve and the five named publishers since 2013, and that Valve eliminated the region locks in 2015, "unless those region locks were necessary for local legal requirements," he wrote.

Despite the EU Commission's allegation that Steam and the publishers entered into "bilateral agreements" to region-lock activation keys, Lombardi said that Valve thinks of itself a platform that should be free of liability.

"Valve believes that the EC's extension of liability to a platform provider in these circumstances is not supported by applicable law," he wrote. Lombardi claimed that without the ability to geo-block games in the EU, publishers will have to raise prices in "less affluent regions" to avoid people in more affluent regions buying games there rather than at home. Traditionally, prices on Steam vary from region to region.

The recipients of the Commission's objections will now have the opportunity to examine the Commission's investigation files, respond in writing, and request a hearing. If the Commission concludes that there was an infringement, it could prohibit the alleged conduct and impose a fine of "up to 10% of a company's annual worldwide turnover."

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