Steam Lawsuit 2024: Latest Updates and What to Know

First, a little background on Steam and its corporate structure.

Valve Corporation launched Steam, a game distribution platform, in 2003. Crunchbase describes Steam as "[A] digital distribution, digital rights management, multiplayer, and communications platform developed by Valve Corporation. It is used to distribute games and related media online, from small independent developers to larger software houses."

Today, millions of gamers interact with Steam's platform, playing games that developers release on the platform and interacting in Steam's Community. Meanwhile, thousands of developers and creators release their games to customers via Steam's storefront.

So, what is the Steam lawsuit about? Steam has been involved in a few different lawsuits, so it's helpful to understand the difference between the various lawsuits and how they relate to each other. The first place to start is the Steam class action lawsuit that was brought by developers.

The beginning of Steam's legal sagas began when a developer sued Steam's parent company, Valve Corporation, alleging antitrust violations. These suits were first filed in 2021 and are ongoing.

Wolfire Sues Valve Corporation

Wolfire, a game developer and the company behind Overgrowth, sued Valve Corporation in April 2021. Wolfire filed a class action complaint alleging various anticompetitive practices by Valve and Steam.

Wolfire explained its rationale for bringing the lawsuit, which essentially boiled down to a belief that Valve was misusing its position as a dominant platform to distort competition in ways that disadvantaged developers, Steam users, and other distribution platforms.

Specifically, Wolfire alleged that Valve requires game developers to agree to so-called "most-favored nations" provisions that require them to offer their products at their best price on Steam. Wolfire argued that the "most-favored nation" policy creates a price floor, suppresses price competition, and results in inflated prices across the market.

As often happens with class action lawsuits, various legal wrangling ensued. (For instance, Valve was initially successful in getting certain parts of Wolfire's complaint dismissed, but the judge gave Wolfire leave to amend their complaint and refine their allegations).

Dark Catt Studios Sues Steam

Dark Catt Studios, another game developer who had had one of their games banned from Steam, also filed a class action lawsuit against Valve in June 2021.

Like Wolfire, Dark Catt also alleged antitrust violations impacting themselves and other game developers. Dark Catt's complaint made similar allegations regarding Valve's monopoly power, including that its "most-favored nation" provisions and certain exclusivity provisions were anticompetitive.

Given the similar nature of the allegations, the judge consolidated the Dark Catt case with the Wolfire proceedings into a single Steam antitrust lawsuit.

Consolidated Steam Class Action Lawsuit: Latest Developments

Given the similarity of the allegations in Wolfire and Dark Catt's class action complaints, the judge ordered the cases to be consolidated under the caption "In re Valve Antitrust Litigation" in June 2022.

Crucially, the judge granted in part and denied in part the game developers' amended complaint. While that might sound like a victory for both sides, the net result is that the case against Valve can proceed, and the company failed to score an early dismissal of the Steam antitrust lawsuit.

The case has now entered what's called the discovery process, and one of the next major battles will be over class certification, a crucial hurdle in many antitrust class action lawsuits.

So, what are the Steam arbitration cases, and how do they differ from the Steam class action lawsuit?

Although the judge allowed the class action against Valve to proceed for game developers, he also ruled that Steam users could not participate in that lawsuit. Instead, gamers with a Steam account must pursue individual arbitration claims against Valve to seek compensation for Valve's alleged anticompetitive behavior.

One law firm in particular has taken the initiative with respect to arbitration claims for Steam gamers as Zaigler LLC says that tens of thousands of Steam users have engaged the firm to seek compensation against Valve for its allegedly illegal business practices and the resulting higher prices users had to pay for their PC games.

The Steam arbitration cases led to another twist in the Steam lawsuit saga, though, causing yet more headlines related to the company's legal woes.

Valve filed a lawsuit against Zaigler, the firm pursuing the mass arbitration cases on behalf of Steam users, in November 2023 alleging the firm had "abused the legal process and interfered with Valve’s relationships with its customers." Indeed, Valve's complaint opened by stating, "This case is the result of unscrupulous lawyers and their funding partner attempting to weaponize the terms of Valve’s dispute resolution agreement with Steam users to line their own pockets."

Essentially, Valve alleges that Zaigler signed up tens of thousands of Steam users as clients in order to force Valve into a settlement without intending to actually arbitrate the individual claims. Valve even got its hand on a confidential slide deck titled "Mass Arbitration Strategy And Investment Opportunity" in which Zaigler purportedly laid out its plan to "weaponize" the arbitration process and specifically identified Valve as a potential target.

Valve's lawsuit made headlines in part because of the spotlight it shines on the sometimes controversial practice of litigation financing, in which a third party finances some of the upfront costs of litigation as an investment strategy with an eye toward turning a profit through an eventual judgment or settlement. Some companies have complained and argue that certain firms abuse the legal process with their mass arbitration strategies. For instance, in a 2023 case, Samsung faced hundreds of millions of dollars in arbitration fees just to commence the arbitration cases.

Thus, the outcome of this particular Valve lawsuit may ultimately be of even greater interest to companies and law firms across the U.S. for the unique light it's shining on the world of litigation finance than it is for Steam users and any potential impact on the litigation over Valve's alleged misuse of its monopoly power vis a vis the Steam storefront.

So, while gamers may have seen headlines about a Steam lawsuit, it is important to understand there have been multiple different lawsuits involving Steam's parent company.

The legal woes all began with the Steam class action lawsuits filed by game developers. These started in 2021 and are still working their way through the court.

Then, because the judge ruled that individual consumers could not participate in the class action lawsuit, arbitration proceedings for individual Steam account holders have also been a legal headache for the company.

But Valve filed a claim of its own and filed suit against the law firm spearheading the arbitration process, alleging that it is abusing the legal process.

As the cases work their way through their respective processes, the gaming industry will surely be interested in the outcomes and how things shake out for Valve and Steam.