EU Charges Valve and 5 Game Publishers With Unfair 'Geo-Blocking' (venturebeat.com)

The European Commission charged Valve, the owner of a video distribution platform, and five game publishers on Friday with preventing EU consumers from shopping around within the European Union to find the best deal for the games they offer. From a report: The case is the latest move by EU antitrust regulators against cross-border curbs on online trade, key to what is seen as a major part of economic growth in the 28-country bloc. The Commission, which oversees competition policy in the 28 EU countries, said that the companies were Valve, the owner of the world's largest video game distribution platform 'Steam', and five game makers -- Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax. "In a true digital single market, European consumers should have the right to buy and play video games of their choice regardless of where they live in the EU," European Competition Commissioner Margrethe Vestager said. The Commission has sent what it calls a "statement of objections" to the companies, allowing them to reply and request hearings to present their arguments.

Comments

Rising prices

[execthts]

Let's hope that they won't raise the poorest regions' prices up to the level of the richest regions' levels.

Re:Rising prices

[Anonymous Brave Guy]

Of course they will. As someone who sells digital products to customers around the world, I have to wonder what else the EU ever thought was going to happen in this situation.

You can call the 28 a single market, but if the purchasing power of people in the relatively wealthy member states is several times that of people in the relatively poor member states and you prohibit market segmentation, the only options you leave your merchants are making all prices the same at some level they choose. Anyone below that level won't be able to buy the product or service anyway, and anyone above that level is getting a discount if they would have bought it at a higher price anyway at the seller's cost.

In the real world, this mostly means that as a merchant, you set a relatively high price because customers from the wealthy nations are usually more profitable, exclude potential customers who are less well off (damaging both you and them, but not damaging you as much as your other options), and then depending on how nasty you are, enforce your copyrights in the poor nations anyway.

This is a textbook example of the EU's idealistic principles coming into contact with economic reality and losing, and of course both their citizens and their businesses probably lose out as a result, but the Single Market must be protected above all else because reasons...

Re:Rising prices

[fazig]

Platforms like Netflix have to struggle with different issues like licensing the series, which can work differently for each country. If there are TV channels that already are a licence holder in that specific country this becomes even more complicated.

The EU would first have to unify the licensing market in some way, or the member states would have to reach some consensus through other means, before this can happen.

Re:Rising prices

[Anonymous Brave Guy]

Unfortunately, this argument also seems to have only one conclusion under current EU rules: platforms like Netflix can't offer content anywhere in the EU unless they hold the relevant licences for everywhere in the EU.

This criticism, along with the pricing level problem I mentioned in another comment below, has been made repeatedly for about as long as the EU has been trying to establish a digital single market.

Re:Rising prices

[drinkypoo]

platforms like Netflix can't offer content anywhere in the EU unless they hold the relevant licences for everywhere in the EU.

That's not really a problem, it will only require some adjustment. Nobody else will be able to, either, so the people who control the licenses will start providing licensing that permits such distribution. Otherwise they lose out on the sales entirely.

Re:Rising prices

[Bert64]

Or having a license anywhere in the EU automatically grants an EU-wide license since the EU doesn't allow something to be licensed in only one member state as that's an artificial restriction of trade.

Re:Rising prices

[Anonymous Brave Guy]

The purchasing power of people within any market will vary, and any pricing will inherently discriminate against those who can't afford it...

Of course, and merchants often segment markets as a result. That's basic economics at work. The difference here is that the EU is artificially distorting what would happen in a free market for ideological reasons, and there are a variety of adverse consequences to doing that.

The difference with digital content is that the pricing is totally arbitrary, and has no relation to the cost of actually providing the content.

That's not entirely true because of issues like taxes and regulatory compliance, but sure, the basic idea is correct.

Now, please consider this thought experiment. You have an idea for a product with a potential global market of exactly two people, who would both like to have one. One is quite wealthy and would be willing to spend €1,000 for that purpose, while the other is no less enthusiastic but can only afford to spend €100. Meanwhile, you would have fixed R&D costs of €1,030, and the marginal cost to manufacture and supply would be a further €10 per item.

There is a way for all three of you to end up winning here: if each customer gets to buy the product they want for a price they consider worthwhile, they get the products, and you get to make around 5% profit margin on the sales. However, that involves price discrimination, offering your less well-off customer a lower price. If you're not allowed to do that and may only choose a single price level that both customers must be offered, there is no level you can choose that will allow both customers to pay a price they consider acceptable while still making a profit for you as the seller.

Scale that up to the size and complexity of European economics and you have the basic problem with current EU policy in a nutshell.

Re:Rising prices

[Anonymous Brave Guy]

The trouble with this sort of argument is that IP law is mostly made at a global scale through mechanisms like WIPO treaties. The EU might not have the ability to enforce arbitrary restrictions on IP and licensing like that.

Re:Rising prices

[dabadab]

Unfortunately, this argument also seems to have only one conclusion under current EU rules: platforms like Netflix can't offer content anywhere in the EU unless they hold the relevant licences for everywhere in the EU.

That's patently untrue. Steam is not charged because it does not sell something in regions where it is legally not allowed to: that would be absurd. Also, the EU has already explicitly acknowledged the problem of distributing digital content in a fragmented market where you may not have license in all the EU states and it's OK with a partial distribuion so much that it already has regulation for this exact situation.

Re:Rising prices

[psycho12345]

No, it has always been an economic union. Europe has experienced the longest running peace in centuries because of it. They've had wars on the Continent almost every 40 years prior to that.

https://en.wikipedia.org/wiki/...

Re:Rising prices

[AmiMoJo]

That's wrong, the rules do allow different countries to have different content available. The EU even made an FAQ explaining this here: http://europa.eu/rapid/press-r...

The issue is that if someone takes out a Netflix subscription in their country of residence and then goes to a different EU country for work or a holiday, they need to have access to all the content from their home country.

That's not what TFA is about though, TFA is talking about the ability to buy games from other regions and have them work in your country. In the single market you should be able to buy a game cheaper from Romania and play it in Germany. Same for online services etc.

Re:Rising prices

[Anonymous Brave Guy]

I described a thought experiment in another comment to illustrate why allowing price discrimination can ultimately result in better outcomes for everyone under some circumstances. Perhaps instead of arguing based on your personal moral standards, which is inevitably subjective, you'd like to explain how your version would help some or all of the participants more in the scenario I described there?

When are they doing this to Netflix etc.?

[Quakeulf]

There are so many others out there guilty of the same beyond just games. The movie/series industries in particular. I am sick and tired of Discovery Channel's geoblocking of their online content which forces me to pirate if I want to see their content that they never released for Nirwegian audiences in the first place, specifically Mythbusters. How I would love to be proved wrong.

Netflix is the salvation

[SuperKendall]

There are so many others out there guilty of the same beyond just games.

Netflix has no control over region availability of content that is not theirs, so you'd have to ask why they do not go after studios...

Netflix itself is awesome, because all content produced by Netflix is available in all regions. As the Netflix library expands, more and more content is world-wide, a major plus to going with Netflix instead of some dinosaur of media that insists on keeping some things to specific regions of the Earth.

Re:it's NOT valve's 'fault'..

[Anubis IV]

they just enforce what the developers and publishers demand.

By that logic, the mafia's goons aren't culpable for their crimes since they're merely enforcing what their bosses are demanding of them.

Without regard for whether or not Valve is actually at fault here, one thing I can say definitively is that engaging in an activity at someone else's request doesn't magically absolve you of your legal responsibilities.

Kobo

[Tomahawk]

I wish they'd do the same for Kobo Books...

I can only buy from the Irish store because I have an Irish credit card. I can't buy from the UK store as I don't have a UK credit card. Books are generally much much cheaper on the UK store.

I can browse the UK store, but get redirected to the Irish store when I try to buy something.

EU VAT rules

[Anonymous Coward]

Companies selling digitally delivered goods and services in the EU are required by law to gather evidence of where they customers are located.

The sales tax (value added tax) percentages, thresholds and rules vary widely across the EU. In the Netherlands you pay VAT on the first euro of sales. In the UK you can sell the equivalent of about 75000 euros of stuff before you need to charge VAT.

VAT is supposed to be paid to the country where the buyer is located. If you sell a pdf knitting pattern to someone in Bulgaria you are supposed to get the tax sent to the government of Bulgaria.

The intention is to stop an Amazon subsidiary in Luxembourg processing all their EU sales at the lowest VAT rate. In practice it means a person who, as a tiny business, wants to sell fifty $20 software licences or pdf knitting patterns has deal with calculating VAT using 28 different sets of rules and there is a chance of being audited by the Bulgarian tax authority.

It's a bureaucratic nightmare for small businesses.