Video games have a long history of geo-blocking (aka region locking). In many cases, the practice has legitimate uses, such as preventing software from running where it might be illegal or censored. However, in 2018, the EU imposed rules against “unjustified geo-blocking” and views it as a means to “price discriminate” in specific areas in the Union.
The European Commission has fined Valve and five other video game publishers a total of €7.8 million ($9.5 million) for “geo-blocking” certain games. Geo-blocking is when a publisher or, in Valve’s case, a distribution platform restricts game sales based on geographic location. The Commission claims this practice violates EU antitrust rules. It is worth noting that the EC’s investigation focused on the sale of region-locked activation keys and the games themselves.
Aside from Valve, the Commission named Capcom, Bandai Namco, ZeniMax, Koch Media, and Focus Home as rule-breakers. Collectively the companies blocked more than 100 games from regions including Czechia, Poland, Hungary, Romania, Slovakia, Estonia, Latvia, and Lithuania.
Margrethe Vestager, executive vice-president in charge of competition policy, issued a statement noting that the fines should remind publishers that geo-blocking is not allowed in the European Union.
“More than 50% of all Europeans play video games. The videogame [sic] industry in Europe is thriving and it is now worth over €17 billion. Today’s sanctions against the “geo-blocking” practices of Valve and five PC video game publishers serve as a reminder that under EU competition law, companies are prohibited from contractually restricting cross-border sales. Such practices deprive European consumers of the benefits of the EU Digital Single Market and of the opportunity to shop around for the most suitable offer in the EU.”
The five publishers had their fines reduced between 10 and 15 percent for cooperating with the Commission’s investigation. Valve chose not to cooperate and received an unreduced penalty of more than €1.6 million ($2 million).
Valve has not commented on the Commission’s action. However, when the EC asked the company to stop the practice last year, Valve told The Verge in a statement that only “a small number of games” (about 3 percent) were geo-blocked. It explained that with limited exceptions, it turned off geo-blocking in European regions in 2015. It further argued that it should not be held responsible for publishers that use region-locked activation since it does not directly sell Steam keys.