Yesterday we reported about the ongoing lawsuit between Valve and the Australian Competition and Consumer Commission. That case has primarily been about Valve’s refunds policy, or the formal lack thereof from 2011 to 2015. But another undercurrent of the case has been a series of applications from Valve trying to suppress any information about how much money they really make.
The case between Valve and the ACCC resumed on Tuesday, but it wasn’t until Thursday that Justice Edelman’s ruling on the latest request for confidentiality was published. For accuracy, here’s precisely what Valve wanted kept quiet:
The information about which confidentiality orders are sought by Valve is contained in answers given by Valve to four interrogatories, which is repeated in various affidavit evidence and submissions. Those answers are as follows:
(1) Valve’s worldwide gross revenue from all sources for 2011, 2012, 2013, 2014 and 2015 (up to 1 June 2015) (interrogatory 11);
(2) Valve’s worldwide net profit from all sources for 2011, 2012, 2013, 2014 and 2015 (up to 1 June 2015) (interrogatory 12);
(3) Valve’s estimated net profit from purchases (subscriptions) by Australian Subscribers to Valve’s video games and third party games for 2011, 2012, 2013, 2014 and 2015 (up to 1 June 2015) (interrogatory 13); and
(4) Valve’s estimated gross revenue from purchases (subscriptions) by Australian Subscribers to Valve’s video games and third party games for 2011, 2012, 2013, 2014 and 2015 (up to 1 June 2015) (interrogatory 14).
A large part of Valve’s argument centred on the belief that it would be placed at a competitive disadvantage if other companies knew precisely how much bank Valve made from Steam. Earlier in the trial, Valve didn’t even want that information to become public. Here’s a nice quote from Justice Edelman:
Another is in relation to Valve’s submission that it would be prejudiced if the public became aware that (if it were the case) Valve is a highly profitable business. This is a very surprising submission. It is difficult to see how there would be any surprise to a member of the public to discover that an enterprise with millions of subscribers in Australia alone, and operating in many countries across the world, is “highly profitable”.
This week’s confidentiality submission was a little more reasonable than what Valve’s lawyers tried earlier this year. Back then, Valve argued that telling the world that they were a “highly profitable business” and that even revealing “the relative size of Valve’s business” could motivate companies to negotiate harder with them, encourage competitors, result in “more third party claims such as ‘patent troll cases'”, and potentially more “fraudulent equipment orders”. (That’s when someone pretends to be a Valve employee and orders a whole bunch of tech to an address.)
On top of that, Valve also asked that the court’s “reasons for judgment” after the relief hearing be provided to Valve so they could argue against those being made public as well.
So when presented with the prospect that life might become harder for Valve if the world knew how rich they were, Justice Edelman formally replied with what could be described as the legal equivalent of “lol no”.
“Even without examining the details of Valve’s net profits, it is very difficult to see how any disclosure that Valve is a highly profitable business will come as a great surprise to any fraudster, third party game developer, potential business partner, patent troll, or supplier,” Justice Edelman ruled in June.
The judge didn’t have much sympathy for Valve’s latest application:
“Valve asserted that revealing the information would enable competitors to gauge ‘their position in the market as against that of Valve’ or provide benchmarks by which competitors could measure their relative success or failure,” Justice Edelman said.
“It appeared to be submitted, with a straight face, that competitors in the market would not otherwise have sought to gauge their position against a market participant in Australia who has 2.2 million subscribers. As a submission (or, more accurately, an assertion) which is essentially one of economics, it is even more curious in circumstances in which the industry is one characterised by rapid innovation.”
Some of the Australian-specific details did become public, including the number of refunds Valve gave to Australians from 2011 to 2015. But anything with actual confidential information falls under the category of a restricted document, which can’t be viewed by third parties without Valve having a chance to argue why that info should be kept secret.
Didn’t stop Valve from trying to keep the whole thing under wraps until November 2021. As you’d expect by now, Justice Edelman shut that down pretty hard too:
All of the information is historical data. The most recent of the information is nearly a year and a half old. As I have explained, this is an industry characterised by rapid innovation. And yet, in its extraordinary overreach, Valve sought orders that the information be suppressed for five years until 15 November 2021. This would have the effect of suppressing one-fifth of the information, for up to a decade from the time it was produced, in an innovative industry.
Unsurprisingly, Valve’s application was dismissed with costs.