EU investigating Valve and others for geo-blocking

Publishers have been cracking down on key sellers like GMG, CDKeys, GamersGate, G2A, etc by geo-blocking to keep keys from working across regional borders. If you lock the keys down to their intended regions, people in areas with higher prices won’t be able to take advantage of the lower-priced offers from places like The Czech Republic.

The EU Commission says this is not okay.

The European Commission has launched three separate investigations to assess if certain online sales practices prevent, in breach of EU antitrust rules, consumers from enjoying cross-border choice and being able to buy consumer electronics, video games and hotel accommodation at competitive prices.[/quote]

The Commission is investigating bilateral agreements concluded between Valve Corporation, owner of the Steam game distribution platform, and five PC video game publishers, Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax. The investigation concerns geo-blocking practices, where companies prevent consumers from purchasing digital content, in this case PC video games, because of the consumer’s location or country of residence.

After the purchase of certain PC video games users need to confirm that their copy of the game is not pirated to be able to play it. This is done with an “activation key” on Valve’s game distribution platform, Steam. This system is applied for a wide range of games, including sports, simulation and action games.

The investigation focuses on whether the agreements in question require or have required the use of activation keys for the purpose of geo-blocking. In particular, an “activation key” can grant access to a purchased game only to consumers in a particular EU Member State (for example the Czech Republic or Poland). This may amount to a breach of EU competition rules by reducing cross-border competition as a result of restricting so-called “parallel trade” within the Single Market and preventing consumers from buying cheaper games that may be available in other Member States.

The Commission is carrying out this in-depth investigation on its own initiative.[/quote]

If the EU forces Steam to stop geo-blocking, look for Valve to solve that problem in Gordian Knot fashion by simply charging one single (highest) price across all EU nations.

“There. All fixed.”

I’m pretty sure Valve’s response will be to push it back on the publishers. “They set the prices and decide the key restrictions. Not us!”

Yeah, since that is in fact the case (although Valve can certainly make recommendations), I very much see them passing the buck on this one.

And I could certainly see the end fix being exactly what @triggercut mentioned, the same price across regions, notably the highest one.

Yeah, they’ll push it to publishers “But they told us to do that!” And then the end result is that countries that have justifiably gotten some help from regional pricing will get slammed.

For some reason, my perception is that UBI does a lot of regional pricing and sticks to those guns pretty hard with UPlay. Guess the EU decided to pick a fight with the biggest gorilla in the room first.

If the EU’s course of action is what it was for geoblocking among broadcasters, that’s not going to be good enough. They’ll (try to) force Valve to change their agreements with the publishers. Not sure how they’d enforce it in this case, though. For the broadcasters, they could lean on Sky UK. Maybe they’d go after the publishers directly, most of which will have European arms.

Why hasn’t the EU slapped DVDs and Blu-Rays then? They’ve been going for years.

Because you can buy and use those DVDs (actually, when it was the DVD days, I was ordering all my boxed series from the UK and Germany, at half or less of the French price, and you could read them without region trouble, of course).
The problem here is that keys for products bought in specific EU territory can’t be activated elsewhere in the EU, which is against the whatever the EU or EU’s principles are supposed to be (don’t ask me that).
Theorically it might also be, from my understanding, that if you so chose, you could purchase them from outside the said-countries at that countries’ prices, although I have no idea how this could pe practicable for online purchases of digital goods without just applying a global pricing.

Yep, they’re really forcing Valve’s and publishers hand in this. Honestly I see both points. The EU wants things to be fair with a unified economy, but where cost of living is way lower and wages are lower you want your product to be affordable otherwise in the digital age they’ll just move to piracy. Places like Romania/Bulgaria are a long way off from parity with France or the U.K. though. It sucks for everyone?

Bear in mind, though, that with the broadcasters, they didn’t end up forcing them to sell, say, UK TV to French customers. In fact, the contracts were allowed to have bans on marketing to overseas customers, they just couldn’t prevent them from “responding to unsolicited requests” from overseas. I’m not sure how that would work in the context of something like Steam, where the storefront is the main form of marketing, and you can’t exactly ring them up and buy a game.

To me it seems like it would involve not geoblocking keys. You’ll get your native pricing for Steam on Steam, but an “unsolicited request” would be sourcing your Steam key somewhere else. The EU isn’t looking at the key resellers, after all.

Yeah, that makes sense, I guess. Relatively limited application, then, especially if publishers/Steam tighten up keys more.

There’s another dimension to this: youth protection. If you sell uncensored copies of Wolfenstein in Germany, you’ll find yourself in jail faster than you can spell “swastika”. One of the cases in which geo-locking helps doing what the law demands.

Actually, if I remember correctly, the Steam client, always watching you, prevents you from starting unauthorized games from certain territories. But the fact some products are illegal to sale in other countries doesn’t make it a problem for the person selling it in a country where it is legal; after all, the blame is on the person buying it in such case, isn’t it?

Artificial regional price locking is absolutely ridiculous for digital products. I’ve been boycotting Steam since they introduced it a few years after inception. Even GOG (at what I assume was from pressure from publishers) attempted to instigate regional pricing but faced a huge consumer backlash. They “solved” the problem by giving the difference between the lowests to highest price in store credit. They call it “One World Fair Price”.

Any kind of geo-locking on the internet is stupid, ridiculous, crazy (insert any other appropriate word).
The whole ethos of the internet should be to remove boundaries not to artificially create them.

This is fine in theory. The natural result will be higher prices, as publishers will sell their digital goods at the price determined by the most robust market, where a higher price is viable. Back in the day, for example, Sony was selling stuff in Russia for like five bucks, and forty dollars here. This was to get some revenue from goods that would otherwise be pirated, resulting in zero revenue. Without region locking, no one in their right mind would pay forty dollars for what they could get for five. Ergo, publishers won’t let that happen; everyone will pay forty dollars. Or pirate it.

I lived in Australia when COD4 Warfare first came out, and watched the game go from $50AU on release day to $80AU a few days later when Activision realized it was cheaper than it was at the retail stores in Australia. The US to AU conversion rate was essentially at a 1:1 parity at that point too.

The thing is, my hate didn’t go to Steam but instead went to Activision. They are in charge of the pricing per area, not Steam so I don’t understand how the EU has a case. If I geoblock and do different pricing for youtube videos is the EU going to come after Google?

This is fine in theory. The natural result will be higher prices, as publishers will sell their digital goods at the price determined by the most robust market, where a higher price is viable.

Economic theory is quite clear on this, prices will reduce on the high end and increase on the low end. It will not result in all prices increasing to match the highest price. Real world experience is also unequivocal that that is what happens, it’s elemental revenue maximisation.

Quite possible. Though conventional economic theory doesn’t always hold with globalized digital goods. In any event, prices will definitely go up for someone, and if you’re correct, that someone is the people who heretofore have enjoyed lower prices. Ergo, the EU is in effect trying to push down prices for more affluent countries, and raise them for less affluent markets. Or so it would seem.