This is a guest post by Joost van Dreunen. Joost is CEO of data firm ALDORA and an adjunct assistant professor at NYU Stern School of Business, where he teaches the economics of interactive entertainment. He is the author of One Up: Creativity, Competition, and the Global Business of Video Games, and writes the industry newsletter SuperJoost Playlist. His research focuses on the strategic dynamics of media platforms and the evolution of the creative economy.
Joost’s work on platforms and the gaming industry is very influential, and ties in with the research questions asked in CREATe’s project on Cloud Gaming and the Changing Landscape of the Video Game Industry.’
In 2003, Valve launched Steam to fix a broken system: patching was chaotic, piracy rampant, and retail access uneven. Two decades later, the platform stands accused of breaking something else: the rules of competition.
This summer, Wolfire v. Valve enters a critical phase. The case, now certified as a class action in the U.S. District Court for the Western District of Washington, challenges whether Valve’s policies around pricing and distribution constitute unlawful maintenance of monopoly power. It’s a potentially precedent-setting moment for the legal treatment of digital platforms, and one that carries major implications for the future of creative industries.
The Legal Core: Parity Clauses and Platform Control
The suit targets Steam’s use of most-favoured-nation (MFN) clauses, known here as parity requirements. These contractual terms prohibit developers and publishers from offering better pricing, early access, or exclusive content on competing storefronts. On paper, they ensure fairness to Steam’s 132 million monthly active users. In practice, they inhibit competition.
Competing stores such as Epic Games Store and GOG are prevented from using lower prices or special promotions to attract either customers or publishers. As a result, they struggle to differentiate in a market where Valve already controls the largest audience and enjoys dominant network effects.
The legal theory rests on a familiar antitrust concern: that a firm with substantial market power is using vertical restraints not to improve consumer welfare, but to entrench its own dominance. In the Wolfire complaint, plaintiffs argue that Steam’s parity clauses are not pro-competitive but, in effect, exclusionary.
From Industry Innovator to Digital Gatekeeper
To understand the stakes, it helps to revisit Steam’s origins. In the early 2000s, Valve, then best known for its narrative-driven first-person shooter Half-Life, was a rare innovator. PC gaming at the time was fragmented, plagued by piracy, patching chaos, and an inefficient retail model dominated by big-box stores. Steam launched not as a marketplace but as infrastructure: a self-updating content delivery system that bypassed traditional publishers and solved technical headaches for players. Within a year, it had 1.5 million users. As it evolved into a storefront, it revolutionized PC game distribution, catalyzed the indie game boom, and by 2012 controlled over 70% of the global digital PC game market. Its rise marked a larger shift: platforms were no longer just facilitators but had become both gatekeepers and growth engines for the creative economy. And platform dynamics evolve. Today, Steam is no longer a disruptive force. It’s a bottleneck.
Valve is a private company and publishes limited financial data. But third-party estimates suggest that it generated $3.2 billion in 2023 from Steam alone, employing fewer than 100 staff in its store operations. That works out to $42 million in revenue per employee—a staggering figure compared to PlayStation ($2 million), Nintendo ($1.5 million), and Xbox ($1.1 million) by similar metrics.
Crucially, Valve still charges a 30% commission on game sales—a fee structure introduced in the early 2000s and barely adjusted since. Epic Games Store and others have pushed for lower fees, often around 12%, yet Valve has resisted this trend. The Wolfire plaintiffs argue that Steam’s size and influence allow it to prevent such competition from gaining traction, not simply outcompete rivals on merit.
Steam’s annual platform fee-based revenue has nearly tripled over the past decade, growing from $1.1 billion in 2015 to an estimated $3.2 billion in 2024. This sustained growth reflects not just user demand, but Valve’s enduring ability to extract a 30% commission across a market it increasingly shapes.
Economic Harm and Legal Implications
The filings in Wolfire include internal emails showing Valve actively monitoring and enforcing its pricing discipline. In one instance, a Valve employee admonished a publisher for offering a bigger discount on a rival store shortly after a Steam promotion. “We gave them a ton of exposure,” the message reads, “only to have them beat the discount one week later.” Another message warns that titles could lose promotional placement if found cheaper elsewhere.
This is not the behavior of a neutral platform. It’s an attempt to control downstream competition using upstream visibility—a tactic familiar in other digital sectors.
According to economist Zachary Schwartz, Valve’s commission in a competitive environment would likely fall to 17–18%. Applied retroactively across the class period, the overcharge to developers could exceed $3.1 billion.[1] This represents more than theoretical harm. It has real consequences for studios, especially small and midsize teams operating with tight margins.
A Precedent Beyond Gaming
Valve contends that it faces robust competition—from consoles, mobile app stores, and publisher-run launchers. It characterizes Steam as a two-sided platform in a competitive multi-platform ecosystem. This is the same logic Apple deployed in Epic Games v. Apple—and it was only partially persuasive.
What that defense overlooks is the role of platform chokepoints. As the Wolfire team argues, Steam’s position allows it to dictate key economic terms—pricing, promotion, and placement—across a majority of the PC gaming market. It controls discoverability. It controls monetization. And its competitors must navigate around the rules it imposes, not the other way around.
Why This Matters for Creative Industries
The implications of this case extend well beyond gaming. Parity clauses are used in app stores, subscription platforms, and digital marketplaces across the cultural economy. If Wolfire results in a ruling that such clauses are anticompetitive when used by dominant platforms, it could reshape pricing, access, and business model flexibility across music, streaming video, and publishing.
The risk, from a regulatory standpoint, is that we treat platforms as if they are neutral infrastructure rather than strategic actors. As the digital creative economy becomes increasingly platformized, the ability of creators to reach audiences is increasingly mediated—and constrained—by platform rules.
What began as a revolution in access now often functions as a system of gatekeeping.
Valve’s Legacy, Reconsidered
Valve’s contribution to the games industry is undeniable. But even beloved innovators evolve into incumbents. Steam’s original promise—open access, flexible publishing, empowerment of indie creators—now sits uncomfortably alongside its current role as a market-disciplining force.
For developers, especially those without the backing of a major publisher, the options are narrowing. Either play by Valve’s rules or face near-total obscurity. The Wolfire case is, in effect, a legal test of how much freedom developers still have in what is ostensibly an open market.
The outcome won’t just determine the fate of one lawsuit. It will shape the boundaries of digital platform accountability and the degree to which legal frameworks are able to rein in dominance under the guise of neutrality.
[1] Steven Schwartz, Reply Class Certification Expert Report, Case No. 2:21-cv-00563-JCC, U.S. District Court for the Western District of Washington, July 12, 2024, 3, https://www.courtlistener.com/docket/59813236/in-re-valve-antitrust-litigation/.