Epic Games reduce their cut for Unreal Engine games for same-day Epic Store launches

Quoting: pleasereadthemanualIn the Exhibit 85 document on Aug 23, 2024, there is some reference to emails from Valve about price parity that is being submitted as evidence.

For context, the plaintiff's expert witness produced a report saying what the plaintiff wanted; Valve's expert witness (compellingly, IMO) said that plaintiff's report was terrible and shouldn't be allowed in the case, and the document you're looking at is plaintiffs arguing that their export report should totally be allowed. None of it's actually in the case as evidence yet. Both sides are still in the "what is this case actually about" stage. Although, to be fair, once "what a case is actually about" is decided in anti-trust cases, the outcome tends to follow directly - hence the years of haggling before that point.

Quoting: CatKiller

Quoting: pleasereadthemanualIn the Exhibit 85 document on Aug 23, 2024, there is some reference to emails from Valve about price parity that is being submitted as evidence.

For context, the plaintiff's expert witness produced a report saying what the plaintiff wanted; Valve's expert witness (compellingly, IMO) said that plaintiff's report was terrible and shouldn't be allowed in the case, and the document you're looking at is plaintiffs arguing that their export report should totally be allowed. None of it's actually in the case as evidence yet. Both sides are still in the "what is this case actually about" stage. Although, to be fair, once "what a case is actually about" is decided in anti-trust cases, the outcome tends to follow directly - hence the years of haggling before that point.

I won't pretend to understand the specifics here (and there are a lot of documents to sift through), but my understanding is that these are direct quotes from emails. I think the only way Valve could come out of this cleanly is if the emails were completely fabricated.

But it does seem early to conclude whether that is evidence or not.

Quoting: pleasereadthemanualI won't pretend to understand the specifics here (and there are a lot of documents to sift through), but my understanding is that these are direct quotes from emails. I think the only way Valve could come out of this cleanly is if the emails were completely fabricated.

But it does seem early to conclude whether that is evidence or not.

Oh, I'm sure they were excerpts of actual emails sent from actual people at Valve. Discovery dredges up a tonne of stuff - from other companies, too, as you noted. The court will look at the context of the documents, and both sides will make their arguments, and the court will decide whether it shows a policy or pattern of wrongdoing, or whether it's just perfectly fine course of business stuff.

Plaintiffs have to throw every accusation they can, since they can't generally add them afterwards, and then they have to dig around to find something that might support their position; the court case is what determines whether there's any validity to it.

Media and commentators love to look at accusations of the plaintiff, since they get to go first and they necessarily have to throw in the most salacious stuff, whereas actual court cases are really long and kinda boring.

Quoting: CatKiller

Quoting: pleasereadthemanualI won't pretend to understand the specifics here (and there are a lot of documents to sift through), but my understanding is that these are direct quotes from emails. I think the only way Valve could come out of this cleanly is if the emails were completely fabricated.

But it does seem early to conclude whether that is evidence or not.

Oh, I'm sure they were excerpts of actual emails sent from actual people at Valve. Discovery dredges up a tonne of stuff - from other companies, too, as you noted. The court will look at the context of the documents, and both sides will make their arguments, and the court will decide whether it shows a policy or pattern of wrongdoing, or whether it's just perfectly fine course of business stuff.

Plaintiffs have to throw every accusation they can, since they can't generally add them afterwards, and then they have to dig around to find something that might support their position; the court case is what determines whether there's any validity to it.

Media and commentators love to look at accusations of the plaintiff, since they get to go first and they necessarily have to throw in the most salacious stuff, whereas actual court cases are really long and kinda boring.

I agree with all of this, though assuming all of these emails are factual, I don't think any amount of context will change my opinion. But we'll see.

Do you have a link to Valve's rebuttal? I'd be interested in reading it.

Quoting: pleasereadthemanualI agree with all of this, though assuming all of these emails are factual, I don't think any amount of context will change my opinion. But we'll see.

What Valve have said is that they want their customers to get a fair deal, and if it looks like they aren't they would like to find out why and if there's anything they can do to change that. Is that "getting a good deal for your customers" or is that "monopolistic price-fixing"? Given that it's publishers that set their own prices, and you can find games cheaper than on Steam, is there any actual harm from Valve's actions even if their intent was super nefarious? Those are the kinds of questions that the court would have to find answers for.

Quoting: pleasereadthemanualDo you have a link to Valve's rebuttal? I'd be interested in reading it.

It's the first two attachments (reports from two expert witnesses) on the motion to exclude testimony of Dr Schwarz, as I recall. The first one is about 300 pages. It's a while since I read it. Um... these two, I think: Attachment 1 and Attachment 2

Quoting: CatKillerWhat Valve have said is that they want their customers to get a fair deal, and if it looks like they aren't they would like to find out why and if there's anything they can do to change that. Is that "getting a good deal for your customers" or is that "monopolistic price-fixing"? Given that it's publishers that set their own prices, and you can find games cheaper than on Steam, is there any actual harm from Valve's actions even if their intent was super nefarious? Those are the kinds of questions that the court would have to find answers for.

For sure, it's up to the courts and not armchair lawyer P.R.T Manual. My opinion is this:

Threatening to de-list a publisher's game from Steam if they do not bring the price down to match the game's price on other stores has a direct impact on other stores—namely, Epic Games Store (EGS). EGS takes a smaller cut than Steam, which means publishers would be able to price their games lower on EGS to get more sales. But because of Steam's price parity policy, publishers can't take advantage of this. We can argue whether Steam's cut is fair or not (I think it is), but it's that royalty split that is responsible for EGS customers getting a better deal than Steam customers. If Valve is really so concerned about making sure Steam customers get a better deal, they should match EGS' royalty split. If not, they shouldn't threaten publishers with de-listing because EGS has a more attractive deal.

I mentioned EGS because of its obvious relevance to the case, but this applies equally to smaller stores like itch.io. Wolfire is an indie publisher, and Valve is not above threatening smaller publishers. If Valve didn't enforce price parity, itch.io could rightfully be much more relevant because of its ridiculously good royalty deals for publishers. And I think that's kind of sad.

There's also the fact that Valve has said, for years, that there is no such price parity policy when in reality they actively enforce it, so clearly they think they're doing something wrong too by attempting to hide it.

Quoting: CatKillerIt's the first two attachments (reports from two expert witnesses) on the motion to exclude testimony of Dr Schwarz, as I recall. The first one is about 300 pages. It's a while since I read it. Um... these two, I think: Attachment 1 and Attachment 2

Thanks! This should make for some exciting bedtime reading.

Quoting: pleasereadthemanualThreatening to de-list a publisher's game from Steam if they do not bring the price down to match the game's price on other stores has a direct impact on other stores—namely, Epic Games Store (EGS).

Note that it's not just that they don't want publishers to specifically rip off Steam customers on price, they also don't want them to shaft Steam customers on content. If, say, a game bought on PlayStation has a PlayStation exclusive item, and bought on Xbox has an Xbox exclusive item, and bought on EGS has an EGS exclusive item, then they for sure want the game bought on Steam to have an equivalent Steam item.

As to whether games can be sold cheaper on EGS (or wherever), they absolutely can.

Quoting: LoudTechie[…]

The developers keep developing for Windows. They don't care much about the Steam Deck or Linux or they would provide actual support. They just take the money from people who mostly would buy the games anyway.

Valve suppport these projects because they're part of the platform. Without it they would've had another Steam machine disaster. Steam machines didn't fail because of "bribery" but because Valve overestimated their standing with customers & developers. I'm sure everyone was really shocked nobody wanted to buy expensive PCs you could basically play no games with.

If you murder someone in public there is usually less of a question about it. Microsoft & Valve are bundling their stuff in public. It took quite some time to reach the conclusion that Teams bundling is in fact illegal. So no, in general it's not illegal. Valve does not have a monopoly in the handheld or Linux sector. So I doubt there is any more consideration than their existing illegal activities.

They're not selling anything, what bulk discount should that really be? It's just a mechanism to hurt their competitors. They have basically no extra costs for additional sales (we're talking about digial products). If there was some kind of storage cost, they would've to tie it to the actual storage size needed. Marketing would be just another tying to force developers move their customers to Steam (by your definition illegal).

QuoteThe developers keep developing for windows

And yet the amount of their games compatible with GNU/Linux keeps growing rapidly.
It didn't cost them anything and allows them to compete in places they could've never afforded to compete in.
Thanks to the technical way of wine/proton.
It's easier to convince computers to do something technical than people.

Valve only does it, because it's part of the platform:
that's backwards.
XBOX, Playstation, Android, Epic game store and Switch don't have vendor developed compatibility layers as part of their platforms(Windows does with WSL and Apple does with game porting toolkit).
Especially not one that is open source and is as such useful for other platforms, like Mac(game porting toolkit) or GNU/Linux(UMU).
This is something Valve offers extra on their in an effort to appease users and developers in strengthening their platform.

On the steam machine thing I concede.
I remembered some things wrong.

I still say that paying publishers to develop for an extra platform isn't as scalable as developing translation layers especially in an open source context, because convincing people is hard and expensive, while developing translation layers allows you to use existing talent and projects and once you've achieved something for one case you've also achieved it for all other cases.

on the murder thing:
A. As I already said tying isn't always illegal. It's illegal when a. you're the distantly dominant player in the tying market and b. you're actually using your market dominance to keep other players from effectively competing with you.
This is the minority of all tying cases.
What Epic did for example is legal tying. They're not the distantly dominant player in the game store market and/or the game engine market, so condition a won't be met.
That doesn't make it legal for Valve, because they're the distantly dominant in the game store market.
It actually admits this in the case pleaseReadTheManual refers to.
This simplifies a lot of legal analysis.
It removes the "what is the market?" question, which makes anti-trust cases often difficult(this one is often found in cases against Google).
It removes the "what is market dominance?" question, which less often, but still often makes anti-trust cases difficult(this one is often found in cases against Apple).
B. Even the most obvious murder cases take multiple years, before you get a guilty verdict or even a trial, because the lawyers need to figure out who the damaged party is, what compensation the damaged party wants, which kind of murder it was(manslaughter, first/second/third degree murder), whether there're extra complicating elements to the case(mental health, suppliers, criminal liquidation, etc.), how far the relevant parties are willing to go to get what they want, etc.



The case pleaseReadTheManual refers to actually has an even more wide interpretation of "the tying market" than I present here.
They say that if you connect the use of a product in which you're not dominant(steam keys) to using a product in which you're dominant(steam) without also doing the reverse it's tying.
I simply present that connecting a product in which you're dominant(gaming stores) to a product you're not dominant(OS's) and thereby exploiting your dominant market position(anti-competiveness is exploiting a dominant market position to quell competition) is tying.


On the: they're not selling anything point.
They do sell something for which they as I described before they make several kinds of costs.

What do they sell:
Distribution, service, protection and store space/marketing.
Distribution: the games are hosted on Steam servers meaning that they can be bought, downloaded, maintained and repaired in a large array of possible locations when the publisher can't supply this themselves(DOS, costs, bankruptcy, crashes, etc).
Service: Steam offers several default options like payment method/drm/anti-cheat/api/etc. saving you several man days of choosing the right one for your game(and still the freedom to choose a different one if you want a different one, but that's a different discussion).
Store space/marketing: this is actually a scarce good to them. They have thousands of buying wallets looking at their store, but it is still a finite number, which wallets do you show what? Steam has taken the lottery approach, you can buy a chance to get there, but not the assurance.
Protection: by hosting the content they take a certain level of legal responsibility and risk on themselves the publishers would otherwise have to(this can't be opted out if you use other services, because laws can go pretty far in holding digital infrastructure responsible for what happens there).
Also they moderate both comments and games.


Costs they make for this product:
Hosting: each and every game on the steam store is hosted on Steams servers ensuring availability.
Legal: they take various legal risks and that requires lawyers.(DMCA(prosecuting and defending), EU cybersecurity act, gdpr, ISTG2021, Sherman act, DMA, FTC act, DSA, taxes, etc.)
They function in different jurisdictions, so they will need many different kinds of lawyers(and yes although the location of your headquarters matters it isn't enough several countries will block your platform if you don't comply with local laws).
Moderation: moderators are expensive.
Development: they need to keep the store and the services it offers up-to date.
Marketing: steam gift cards in the physical stores, flatout steam ads, etc.
Administration: lots of money requires lots of administration.
Communication: keeping your customers informed about changes is needed, because they need to be able to adapt.


Savings made thanks to big publishers:
Hosting: fewer files and file classification and thus better compression and less fragmentation and tendency to run own update systems(saving Steam update bandwidth)
Legal: less total content, better legal pre-processing(internal legal teams of the publisher avoid crimes and possibly even send documentation)
Moderation: publisher moderation teams, more uniform content(all of Fortnight has no sex, but only most battle royale games)
Development: most stuff is developed in house and shipped with the game reducing system dependencies(which is the stuff which can force you to update) and better security reviews of the using hosted software.
Marketing: big publishers pull many payers.
Administration: large sums of money are easier to administrate than many small sums, because you need to classify each transaction(ask crypto).
Communication: it's easier to inform one publisher than a thousand.


On the marketing forces and is thus illegal part:
In marketing they're a. not the dominant market player(Google, Apple appstore, etc. are much bigger) and b. it's part of the product they sell and thus within a single market definition.
In this case it thus fails one of the two standard problematic tests: "What's the market?", "What's dominance"
Dominance isn't the case in marketing and in Gaming Store space(where they do have dominance) it's all part of the same product and thus not anti-competative.
As I already said before tying isn't always illegal, but it certainly can be and coupling Steam Store prices to anything other than Steam Store services is certainly one of those.

Quoting: poiuz

Quoting: LoudTechie[…]

The developers keep developing for Windows. They don't care much about the Steam Deck or Linux or they would provide actual support. They just take the money from people who mostly would buy the games anyway.

Valve suppport these projects because they're part of the platform. Without it they would've had another Steam machine disaster. Steam machines didn't fail because of "bribery" but because Valve overestimated their standing with customers & developers. I'm sure everyone was really shocked nobody wanted to buy expensive PCs you could basically play no games with.

If you murder someone in public there is usually less of a question about it. Microsoft & Valve are bundling their stuff in public. It took quite some time to reach the conclusion that Teams bundling is in fact illegal. So no, in general it's not illegal. Valve does not have a monopoly in the handheld or Linux sector. So I doubt there is any more consideration than their existing illegal activities.

They're not selling anything, what bulk discount should that really be? It's just a mechanism to hurt their competitors. They have basically no extra costs for additional sales (we're talking about digial products). If there was some kind of storage cost, they would've to tie it to the actual storage size needed. Marketing would be just another tying to force developers move their customers to Steam (by your definition illegal).