“Somehow, in a dispute over mobile apps, a maker of PC games that does not compete in the mobile market or sell “apps” is being portrayed as a key figure. It’s not.”
What you need to know
- Apple has clashed with Valve over information requested for its antitrust lawsuit with Epic Games.
- Apple is seeking sales information about Valve’s gaming platform Steam, a fierce rival to the Epic Games Store in the PC gaming sector.
- Valve says that the information requested is not readily available, nor does Apple need it for its case.
PC gaming giant Valve, owner and creator of PC and Mac gaming platform Steam, has refused an Apple request to provide information related to sales and advertising revenue for use in its fight against Epic Games.
In a court submission, Apple and Valve submitted a joint letter stating that parties have been unable to reach an agreement over outstanding disputes relating to a subpoena served to Valve in November.
According to Apple:
As the Court’s preliminary injunction ruling makes clear, Epic’s various mobile and non-mobile distribution options are central to disputed issues of market definition and market power. See Case No. 20-cv-05640-YGR, Dkt. 118 at 18 (observing that Fortnite’s “multiplatform nature” suggests other (or all) digital distribution channels “may be economic substitutes”). Valve’s digital distribution service, Steam, is the dominant digital game distributor on the PC platform and is a direct competitor to the Epic Game Store. See Nick Statt, Epic vs. Steam: The Console War Reimagined on the PC, The Verge (Apr. 16, 2019), https://www.theverge.com/2019/4/16/18334865/epic-games-store-versus-steam-valve-pc-gaming-console-war-reimagined Epic, like other game developers, could distribute Fortnite on Apple’s App Store, the Epic Games Store, Valve’s Steam, or through various other digital distribution channels. As a result, in November, Apple served Valve with a document subpoena seeking documents relating to Steam.
Apple says it has requested the following information from Valve:
- Total yearly sales of apps and in-app products
- Annual advertising revenues from Steam
- Annual sales of external products attributable to Steam
- Annual revenues from Steam
- Annual earnings (gross or net) from Steam
A PC Gamer report from 2019 pegged this at over 30,000 games and 21,000 further items including software, DLC, and videos. According to Statista, a further 10,263 games were added to Steam last year. In its response, Valve states that over 30,000 PC games are available on Steam, more than 99% of which were made by third parties.
Apple later states that it has also requested documents “sufficient to show” the name of 436 specific apps on Steam, the date range each app was available, and the price of the app and any in-app product available on Steam.
Apple says this information is “crucial” in calculating the total size of the market for Epic’s available digital distribution channels, which the court says is highly relevant to the case. The court has told Apple it must prove “the strength of competition for consumers and app developers” among digital distribution platforms, and that Valve’s Steam platform is “undoubtedly” a platform that competes to distribute games like Fortnite. Apple says Valve is in a similar situation to Samsung, which the court has already agreed hold similar relevant information.
In response, Valve notes that “most” of the games on its platform can be bought elsewhere, including from developers and retail stores, or other PC game platforms. It further states all third parties control their own pricing and content, and that Valve collects the purchase price from users before remitting proceeds to the third-party developer net of a revenue share to Valve. Unable to resist a quick jab at Epic, Valve states:
Fortnite is not available on Steam, and Epic has publicly and unequivocally stated it will not offer Fortnite on Steam unless Valve changes its business model.
Valve says that Apple’s claim its requests are “narrow” is false regarding the second request relating to the 436 specific titles identified by Apple. Valve says this would “would impose an extraordinary burden” on the company, and states that the information is of little to no value as Valve does not compete in the mobile app market at issue.
It also says that Apple has not shown a substantial need for this information given that Valve does not compete in the same market as Apple, Google, and Samsung. It also states that Apple has contradicted itself by defining ‘market’ in two different ways and that regardless, Valve does not operate in either. Finally, it says the specific request relating to the 436 games “does not show market size or definition”. Valve concludes:
Somehow, in a dispute over mobile apps, a maker of PC games that does not compete in the mobile market or sell “apps” is being portrayed as a key figure. It’s not. The extensive and highly confidential information Apple demands about a subset of the PC games available on Steam does not show the size or parameters of the relevant market and would be massively burdensome to pull together. Apple’s demands for further production should be rejected.
Judge Thomas Hixson will now have to consider the positions of both Apple and Valve before making a decision on the matter.
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