Valve was sued by Wolfire, game developers, for alleged market manipulation, accusing Steam of unfairly using its platform status to dominate and control video game prices. Despite Valve’s attempts to dismiss the case, in May 2022, the court ruled in favor of proceeding with the case, initiating further investigation. During this period, a plethora of internal documents from involved companies were disclosed.
Some of these documents revealed heated discussions between Tim Sweeney, CEO of Epic Games, and Gabe Newell, CEO, Scott Lynch, COO, and Erik Johnson, project manager at Valve. Epic Games Store was experiencing launch issues and facing legal battles with Apple at the time.
Tim had previously emailed Valve in 2017, stating that the platform fee of 30% on Steam seemed fair initially, but with the platform’s increased scale, operational costs decreased. The rapid influx of new games and quick sales led to discrepancies in market value and user acquisition rewards provided to game developers, not aligning with the continued commission charges.
Valve’s lack of response heightened Tim’s frustration, prompting him in December 2018 to criticize Valve for profiting more from games than the actual developers due to the 30% platform fee, another 30% marketing cost, and 15% server/tool expenses, totaling a deduction of 75%, leaving 25% for the game creators, which Tim deemed worse than selling physical game discs through retail stores in the 90s.
Valve later altered its revenue-sharing system, reducing the commission for highly successful games to 20%. Simultaneously, as Tim prepared to launch Epic Games Store and fight legal battles against the imposed restrictions between Epic and Apple, he sent another email to Gabe Newell and Scott Lynch, addressing the issues with Apple before announcing the Epic Games Store’s launch as a direct competitor to Steam, with a fixed 12% platform fee. Tim urged Valve to respond to bolster Epic’s stance against Apple but concluded with derogatory remarks towards Valve, Gabe Newell, and Scott Lynch, calling them “assholes” who wielded market power, while indie game developers paid 30% fees.
Scott Lynch responded to Tim Sweeney’s email with a casual “You mad bro?” remark.
The Wolfire versus Valve case remains ongoing, raising questions about Wolfire’s backers, given the substantial costs associated with litigating for a small company.
TLDR: Valve faces a lawsuit from Wolfire for alleged market manipulation on Steam, sparking heated exchanges between Epic Games and Valve executives amidst industry competition and legal battles.
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