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.
Comments
27 responses to “Valve Really Doesn’t Want People To Know How Rich They Are”
I use steam a lot, as do most gamers, but damn they seem like a shady bunch.
I think its an absolute power corrupting situation…………..I mostly use other places now just so I get charged in Australian dollars and don’t have to do math……..
They’ve got a near monopoly… that’s never a good thing.
Especially since they have all the rail roads and all the utilities.
Justice Edelman with the legalese smackdown!
Studied law for two and a half years, can confirm Edelman drops the smackdown on the reg.
Of course they want to hide it. Valve successfully forced a DRM platform on gamers, gave Australians shitty regional pricing in a foreign currency, and then made everyone love it. Once everyone remembers they’re a business and do things to make money, including crowding out any real competition, that sentiment of goodwill might start to dissipate.
I use and love using Steam, but man I hope that all this information comes out in public, soon.
I would very much like for the regional pricing in a foreign currency to be addressed as well, but that’s a case for another day.
I really want to know more about 3 & 4 broken down to per sale… compared to US. If they have data on what Australians pay in USD… we can prove Australia tax is real (and illegal) by comparinng it to US customer data.
How is that illegal? (genuinely asking btw).
As much as I don’t agree with it, isn’t it the supplier who can choose who they sell to and at what price?
Is the Australian Tax a form of anti consumer “Price Fixing” or in some form goes against the terms if import laws or free trade agreements. The senate inquiry tried to figure this out but were unable to produce subpeonas to compel evidence and could only take their thinly veiled reasons as fact.
Also I really want to know why we still have to pay in USD? And not AUD which helps to disguise price hikes on games *cough* Bethesda.
There was a case earlier this year in the US that basically made geopricing illegal. Ruling was based around different pricing being discriminatory, and while it might have been a local ruling, was in a high enough court it could be applied globally.
Dont think anyone’s actually tried to push that yet, and I’d be surprised if it stuck, but there was a ruling about it about 6 months ago.
Yeah, it’s not actually illegal, and there’s very few ways that the government could compel companies to drop regional pricing, beyond mandating at a national level, domestically, that Australians be protected in making use of VPNs and other technique to bypass it.
There was a parliamentary enquiry held a year or two ago, which dragged Microsoft, Apple, Adobe and others before our senators to explain why it’s cheaper to buy a return planet ticket to the US to buy photoshop than buying it in Australia.
They gave some vague excuses, but almost to a man, each representative essentially shrugged their shoulders and said, “Because fuck you, that’s why. You can’t make us.”
It used to be illegal, prior to the Howard Government, Australia had pricing parity laws that prevented foreign countries from price gouging Australian consumers. That all changed when we signed the US free trade agreement, part of the free trade agreement was that we remove our pricing parity laws, thus enabling US businesses to price gouge Australians.
Do they think we don’t know that Valve is a profitable business?
That was essentially the judge’s argument.
One exceptionally interesting number out of this case is 2.2 million Australian accounts. That’s about 10% of our national population. One in ten Australians has a Steam account. So that’s something… but it’s better in a global context:
Consider that their total number of registered Steam accounts is around 125M.
That puts tiny little Australia at ~6-7% of their subscriber base.
It’s no fucking wonder they decided to submit to the judgement of our courts instead of bolting and risking losing Oz. Can you imagine losing 7% of your profits?
But wait… that’s not actually how much they’d lose if they lost us.
~6-7% of their subscribers are paying hugely-inflated ‘Australia Tax’ prices in a US currency, which could even damn near double their profits from here.
Let me explain:
It’s pretty typical for a AAA title to sell for $50US in America, and $70-90US in Australia. That’s right. Take CoD:BlOps2, for example: $90US in Australia. Not $90AU after currency conversion. No… $70-90US in Australia, which converts to about $120AU.
Napkin Math time:
We know Valve gets a 30% cut off the retail on anything they sell. So a AAA game sold to an American for $50US is worth $15 to Valve.That same AAA game sold to an Australian gets sold to us for $70-90US (IN US DOLLARS), for next to zero extra effort on Valve’s part. That Australian sale is worth $21-27 to Valve. (And the bulk of the unfair gouging goes to the dog-fucking publishers who should be dragged out into the town square to be tarred and feathered.)
This means that every Australian sale is worth on average 1.4-1.8x the amount that US domestic sales are. You can quibble over the additional costs of servicing Australia, but you’d need to reduce those costs by the additonal market reached, which makes it effectively no different from reaching additional market in the US. And when you only hire FIFTY support staff to service 125 MILLION USERS, you gotta imagine they keep their overheads pretty low.
What this napkin math means is that the Australian market is probably worth a bit closer to 10-12% of Steam’s global earnings IF Australians spend at a comparable percentage of disposable income as Americans do. (There’s reason to suspect we might spend more, given that we fared better in the GFC.) You have to assume that other countries would be experiencing regional pricing shenanigans as well, but it turns out after some steamprices research that MOST countries in the world actually have their prices dramatically reduced, which makes it all a bit of a wash of conjecture until those other countries’ courts start pressuring Steam to divulge how many accounts (and sales) they generate there.
So. All else being equal, the fact that we spend 1.5-2x as much as Americans do, IN US DOLLARS, on our games means that I can only assume this would inflate our share of their global take to even more than 12%, perhaps closer to 15%.And there’s no way Valve would ever want to risk that kind of market.
Also, we don’t know that the additional revenue from Valves Australian tax goes to publishers… it might also be going to Valve, as a little extra cream on top.
https://www.penny-arcade.com/comic/2014/11/07/
“Economaniacal.”
The USD pricing in Australia has to go. Biggest offender is Bethesda amongst AAA on steam… all games are region locked and are australian values entered in the USD field… but then all the DLC isnt region locked and is the normal price.
Would live to see their steam sale numbers when everyone goes EB/JB hifi or Green Man / GOG? For Bethesda that uses Steam exclusively for their PC games they are really screwing Australians over and not giving a toss.
Actually Take 2 is biggest and worst offender. Remember they bullied GMG to charge AU and NZ customers more and then the cunts tried to do it to CDPR and GoG.
Didnt hear that one. I know a few publishers are not a fan of key sellers like GMG or GoG, but imo they are not second hand resellers that deal in stolen keys.
Take 2 did good in my book when they messed up the advertise price on XCOM2 their site listed AUD wasnt converted to USD before posting… still took them 2 days to correct it.
At the end of the dayvAustralia Taz is greater than NZ tax due to USD dollar and it should stop
Wow, that post was actually more in depth and lengthy than most of the articles on here these days!
Kudos for the facts.
Glad to see more people question Valve these days. For years their software has been buggy and in need of dire changes and it never happened. Add on the shady pricing and questionable markups that started to happen..
Glad to use more places these days to buy games.
Yes they made a couple of great games… but geez the fanbois who praise Gabe… really have to pull their heads out and realise its a store front with no customer service, DRM and networking issues.
To be fair, this is Valve legal side your seeing here. Corporate lawyers in this sort of thing are always going to come across a little shady I think.
This is making for some nice weekend reading thanks all.
All I’ll add is which will be the next digital distro service to run afoul of the Australian courts? There’s definitely going to be more companies moving into this space like EA, et al have been doing for a while.