Source: Valve, the Anticorporate Hero of the Games Industry, Has Its Antitrust Moment Publisher: Bloomberg | Author: Austin Carr, Cecilia D’Anastasio Published: June 1, 2026 | Archived: June 2, 2026

Gabe Newell, the co-founder and president of the gaming company Valve Corp., spent a morning in November 2023 with a handful of lawyers at the Arctic Club Hotel in downtown Seattle, talking in circles. Newell’s company runs Steam, the dominant online store for PC games, and was facing a lawsuit filed by a set of independent game developers who claimed that Steam operated an illegal monopoly in the $40 billion industry. Because developers relied so heavily on Steam, the suit argued, Valve has been able to stymie competition and charge “supracompetitive” fees.

The suit, which is ongoing, centers on what the developers alleged was a tacit company policy designed to punish them for offering discounts at competing online stores. But instead of defending the purported rule, Newell just denied it existed. “Valve does not have a policy or practice of dictating prices to third-party software developers on other platforms,” he said, according to a previously unreported transcript of his deposition. Presented with internal communications in which Valve employees appeared to be enforcing the rule, Newell repeated his denial, at times verbatim, again and again. When an attorney pressed him on how Valve would react if a developer did charge less money for a game on a competing store, Newell demurred. “I’m confused by your question,” he said, before later adding, “Many of our partners and many of our customers are quite happy with the service that we’re providing.”

Newell structured Valve to avoid the bureaucracy he experienced early in his career at Microsoft.Photographer: Olly Curtis/Future Publishing via Getty Images

Indeed, Valve has a rabid fan base of tens of millions of users for whom Steam is a core part of their online life. The network effects alone make it hard to imagine searching out an alternative, and other online stores have rarely offered features compelling enough to lure people away. Many gamers also regard Newell as an anticorporate hero.

For Valve’s business partners, the situation can be more complicated. Having a unified software and sales hub arguably benefits gamers and game makers. Microsoft Corp.’s former longtime gaming chief Phil Spencer once praised Steam as the “backbone of PC gaming” and described Valve as a positive force for the industry. But not all of Valve’s partners are thrilled with its influence over the market. In addition to the indie developers claiming to be burdened, court filings in the antitrust case contain email correspondence in which leaders from large corporations including Ubisoft Entertainment SA and Warner Bros. appear to be scrambling to do anything they can to avoid running afoul of Valve. The fear among some developers is that doing so can lead to penalties or even expulsion from Steam — a potentially devastating outcome for their game sales. In a recent survey of managers at US- and UK-based PC game developers conducted by market-research firm Atomik Research, 72% of respondents said they viewed Steam as a monopoly.

Steam is as synonymous with PC gaming as Apple and Google’s app stores are with mobile apps, but Valve is a much different company than those Silicon Valley giants. Headquartered in Bellevue, Washington, Valve prides itself on secrecy, and it’s structured to avoid the managerial hierarchies and quarterly pressures of a publicly traded tech company. It has remained privately owned for nearly three decades, does next to no public marketing and has a mythical reputation for letting employees pursue any project they deem most worthwhile — a creative collective built by gamers, for gamers. It has a tiny workforce of about 350 employees, according to the last publicly available figures, and offers generous bonuses, with an eye toward providing benefits a nerd who’s just come into money might need. The handbook for new hires, for instance, includes a comic strip offering tips for taking advantage of a company retreat. (“Find someone to watch your cats. Board our chartered flight. Relax by the pool.”) Newell rarely gives interviews, and veterans of Valve say he eschews most day-to-day decision-making, preferring to play arena-battle game Dota 2 at the office or float around on Leviathan, his superyacht, estimated to cost $500 million.

But when it comes to Steam, Valve has followed a conventional path: Set up a clearinghouse for third-party software and take as much as a 30% cut of sales. These fees have become standard for gaming and app marketplaces, yet criticism has been mounting that they’re a kind of tax that dominant platforms unfairly levy on the businesses relying on them to reach customers. Apple and Google, which helped popularize this model, have faced litigation over the fees in their app stores; this scrutiny has focused on rules that prohibited developers from directing customers to cheaper payment alternatives outside the iPhone and Android platforms. After long and expensive legal battles, judges and lawmakers have forced Apple and Google to loosen those restrictions.

Now, Valve is in the hot seat. Critics argue that its freewheeling culture masks abusive business practices that make the gaming market worse for developers and consumers. The US lawsuit Newell was deposed in, which has been certified as a class action, alleges that it “is not economically feasible” for game makers to leave Steam in favor of a rival store and that they are effectively “forced to comply” with Valve’s rules and high fees. A UK case echoes those claims, alleging Valve is “locking in” its users to Steam and earning “excessive” commissions. In January a London competition tribunal granted a collective proceedings order, a process that allows the case to move forward similarly to the US class-action system.

A Valve spokesperson declined to make Newell or other company leaders available for interviews and didn’t respond to a detailed list of questions. The company denies wrongdoing and has said in court filings that Steam has outperformed its rivals through consistent innovations and that the allegations don’t accurately reflect its store operations or how they benefit consumers and developers. “Customers have enormous choice,” Newell has testified. They can decide “where they purchase their products, whether they buy the game on an Xbox, whether they buy it on Steam, whether they buy it on Epic Games Store or whether they buy it directly from software developers.”

These lawsuits could pose a threat to Valve’s reign over the PC gaming market, which has persisted even as companies as capable as Electronic Arts, Epic Games, Microsoft and Ubisoft opened — and, in some cases, closed — competing online stores. Ethan Evans, the former vice president for Amazon.com Inc.’s Prime gaming business, says Steam’s power over the PC gaming market rivals Google’s hold on search. “When Amazon or anyone else tries to compete with Steam, they run into two problems,” he says. “First, Steam has enormous inertia that is hard to change. And second, for customers to switch stores, they’d have to leave behind decades of investment, because all their game libraries and multiplayer friends are all on Steam.”

Steam’s user base has grown 60% over the last five years, and 42 million people are logged in at any moment. New data from research company PrivCo Holding Inc. estimates that Valve generated $5.2 billion in revenue in 2025, with a net income of $1.5 billion. It’s introducing a slate of gaming devices that includes a living-room console, virtual-reality headset and wireless controller set to come out this year. This all may allow it to maintain its influence over much of the PC market, says Joost van Dreunen, chief executive officer of video game analytics company Aldora. “Valve,” he says, “became a landlord more than anything else.”

As a child growing up in California’s Sacramento Valley, Newell dreamed of becoming a doctor until he fell in love with computer programming. He found a job at a promising Seattle-area upstart named Microsoft, where he proved instrumental to shipping Windows 1.0.

In the early 1990s, after Microsoft had risen to the top of the tech industry, Newell read a market analysis showing that Windows was No. 2 on the list of most-installed programs in the US. Ahead of it was Doom, a video game produced by a tiny outfit outside Dallas. “It was a 12-person company in the suburbs of Texas that didn’t even distribute through retail. It was distributed through bulletin boards and other pre-internet mechanisms,” Newell told Bloomberg Businessweek in 2012. “To me, that was a lightning bolt.”

This epiphany eventually led Newell to team up with another Microsoft engineer to start Valve in 1996. They spent several years creating Half-Life, an immersive PC game that became a juggernaut, in part because of an addictive online multiplayer experience, but also because of free add-ons called mods. The mods were essentially expansion packs or entirely new games, built atop Half-Life’s architecture and downloadable from the web. Some of them grew into blockbuster games in their own right, including Counter-Strike, which eventually became Valve’s marquee franchise.

In the early 2000s, Valve built its Steam store, where users could access and update their games from the internet, and it began carrying games from other companies in 2005. Forbes reported its revenue that year reached $70 million, and Valve, with about 100 employees, boasted an absurd operating profit of $55 million. (In legal filings, Valve has denied the accuracy of public estimates of business metrics such as this.)

At the time Steam was getting started, most gamers were shopping at stores like Circuit City. The price tag might be $50, but more than half of that went to physical retailers and warehouse costs. If developers sold downloadable games through Steam, Valve handled everything including server upkeep, customer support, account billing and fraud protection. It also added developer-friendly features, such as the ability to easily push software updates. For many developers, a 30% cut seemed like a bargain.

More than 1,000 titles had flooded Steam’s catalog by 2010, and it soon surpassed 30 million active users and almost $1 billion in annual sales. A former Valve operations leader — who, like most people who spoke for this story, did so on the condition of anonymity because of concerns over possible career reprisals — recalls that the company spotlighting a new game in a storefront promotion could make a developer rich overnight. “We made an obscene amount of money for everyone,” this person says.

As it grew, Valve nurtured a culture hostile to anything that felt like the bureaucratic thinking Newell had experienced at Microsoft. Job titles were verboten. Employees were empowered with extreme autonomy. Newell — commonly seen around the office futzing with his knife collection or staring a nose apart from what one former staffer says was “the biggest computer monitor on the face of the planet” — seemed to abjure typical founder control, relying on underlings to run things.

The rebellious posture transfigured Newell into something of a beloved holy authority — a meme depicts “Lord GabeN” like a Vatican painting. But that picture wasn’t totally accurate, former Valve employees say. De facto managers of Valve’s ever-changing projects evaluated their colleagues through a version of stack-ranking that was even harsher than Microsoft’s, reminding some of how Survivor cast members vote each other off the island. And despite all the talk of Valve’s no-sacred-cows ethos, there were clearly unspoken rules and influential people that Lord GabeN had implicitly blessed.

Valve’s offices in Bellevue, Washington.Photographer: Olly Curtis/Future Publishing via Getty Images

Six people who’ve worked at Valve describe an environment that oscillated between warm camaraderie and cold detachment. Succeeding meant figuring out which people faced the least disagreement in meetings and following their direction accordingly. If the apparent leaders of a project didn’t like some people’s ideas, they would simply stop responding to their emails — a not-so-subtle hint that it was time to find a new team (if not a new company to work for).

Atypically for a billionaire tech founder, Newell has long insisted he isn’t really the boss. Still, he periodically inserted himself into business decisions, at times caustically. One person recalls Newell ripping into Karl Quackenbush, Valve’s general counsel, because he advocated for more content moderation during a debate about whether to allow pornographic media on Steam: “What the f— do I pay you for if that’s your opinion?” Quackenbush didn’t respond to requests for comment.

This vibe seemed to work for Valve. Counter-Strike, Portal and other franchises were big hits, and Steam had 125 million registered accounts by 2016. An internal 2018 email revealed in discovery during the later antitrust court case shows a group of Valve employees excitedly calculating how much more profitable the company was becoming than Amazon, Apple, Google and Netflix on a per-employee basis. “Plot twist,” wrote Valve economist Kristian Miller. “Again, we are an outlier.”

Adding to the anything-goes aura was the booming market for digital goods related to Valve’s hit games. In Counter-Strike, for instance, players can acquire rainbow-colored guns or army-print knives, primarily by paying to open in-game treasure chests known as loot boxes that dole out rewards intermittently — a feature New York Attorney General Letitia James compared to “slot machines” in a February lawsuit. Valve responded to the suit, which is ongoing, by saying it doesn’t think it’s violating gambling laws. The digital items can be bought and sold on secondary markets, including one Steam runs itself. The most expensive items have sold for as much as $1 million.

A former engineer who interacted regularly with Newell says Valve’s unorthodox structure was ultimately a way for the company to obfuscate accountability. Depositions of Valve employees in the subsequent US antitrust lawsuit show attorneys struggling to pin down the origins of specific corporate decisions, because, these employees claimed, there aren’t really higher-ups in official positions of authority, just loose groups of people who make choices by consensus, often verbally. When Valve succeeded, it credited the wisdom of the crowd. If Newell and his closest associates privately made delicate decisions about, say, how to navigate the Chinese market or when to initiate a round of layoffs, the reasoning was also amorphously attributed to the collective.

Exemplifying this dynamic was Steam’s 30% commission, which some game companies began criticizing publicly around 2018. One former employee involved with the business side recalls brief discussions about exempting games with less than $1 million of cumulative sales but says Newell and his most senior colleagues vetoed the idea out of concern it would dry up a sizable long-term revenue stream. Another ex-employee familiar with the matter says he was shocked that the pricing model generated so little internal dissent despite Valve presenting itself as an ardent friend to developers.

There are plenty of reasons Steam has stayed dominant while other stores struggle to gain momentum. The interface is clunky, but in a retro way, hardly a dealbreaker for a product imbued with so much nostalgia. It saves users’ progress on its own servers, allowing gamers to end a session on one computer, then pick it up on another. There’s an immense selection of games available on the marketplace, with regular promos and sales. Perhaps most important, a lot of gamers don’t consider straying from Steam to be a serious consideration, given that it contains every PC game they’ve ever bought or planned on buying; every buddy on their friends list; every digital item they’ve collected; and every zero-star review or toxic forum post they’ve ever written.

Peter Moore, the former chief operating officer of Electronic Arts Inc., found Steam just too sticky to compete with. EA experimented with everything including opening its own PC store and stopping major releases on Valve’s marketplace, only to reverse course and eventually bring big-name titles such as The Sims 4 and Battlefield V back to Steam. Moore says EA could never quite figure out if the reclusive Newell was a friend or foe. “It was very much ‘Gabe’s got this fortress there near Seattle, and he didn’t come out much,’” Moore recalls.

In 2018, Fortnite maker Epic Games opened its own store, which sought to lure developers by undercutting Valve with a 12% commission. Epic plowed millions of dollars into promotions to attract customers. In 2020 it gave away a version of Grand Theft Auto V, one of the bestselling games of all time. But customers stayed loyal to Steam, and as of early 2026, the Epic Games Store is only “marginally profitable,” its head told video game news site Polygon, and accounts for a little more than 5% of spending on PC gaming.

In emails of Newell’s revealed in the antitrust case, Epic CEO Tim Sweeney argued that Valve’s high fees were “no longer justifiable.” He also said Newell and his colleagues were betraying “the little people” by offering better terms to big-time developers who sell more products. Epic has sued both Apple and Google, alleging they leveraged monopoly power over their mobile ecosystems to extract their 30% fees. (Apple is continuing to fight a court ruling allowing cheaper payments outside the App Store. And Google reached a settlement with Epic, a federal judge in San Francisco is so far withholding his approval.) Epic, though, has remained notably absent from the Steam antitrust suit and declined to comment for this article. Other prominent gaming executives have generally steered clear too, acknowledging privately that they don’t want to anger Valve.

Instead one of the little people is driving the litigation. David Rosen, the lead plaintiff in the lawsuit against Valve in the US, began making games as a child and distributing them over websites such as idevgames.com and Mac forums. In 2003 he founded a studio called Wolfire Games, which published an action game featuring an anthropomorphic rabbit. In 2008 his company approached Valve about selling on Steam. At the time small developers had no standardized way to submit games to the platform, so he simply emailed Valve employees. No one replied to his company’s first half-dozen messages, he says, but eventually, his inquiry found its way to Newell, who signed a contract with Rosen himself.

Rosen is leading the litigation against Valve in the US.Photographer: Christie Hemm Klok for Bloomberg Businessweek

A few years later, Rosen started his own game distribution platform, a pay-what-you-want site called Humble Bundle Inc. The site, which Rosen ran with his brother, took only a 5% cut but, he says, was still turning a profit. Rosen started looking more closely at Valve in 2018, when it implemented a tiered system that gave rate reductions to large game makers, angering indie developers who were stuck paying the higher rates. Rosen reached out to the company again, this time to see how it would react to him selling Overgrowth, another Wolfire game, at a discount on Humble Bundle’s store. “They replied that they would remove Overgrowth from Steam if I allowed it to be sold at a lower price anywhere,” Rosen wrote in a May 2021 blog post explaining why Wolfire decided to sue Valve. (In its response to Wolfire’s suit, Valve disputed Rosen’s description of what occurred on the call.)

A federal judge certified Wolfire’s lawsuit as a class action about three years later. In depositions, Valve employees have suggested its business practices are actually good for the consumer, because they ensure gamers get the best content on Steam for the same cost as anywhere else — an approach they describe as primarily aimed at achieving parity for content between Steam and other stores, not price. Competing marketplaces, meanwhile, have failed to match even Steam’s basic capabilities, never mind its emotional resonance with users. EA’s original store was filled with glitches and had nowhere near the number of third-party titles as Steam, while Epic’s rival launched without such standard features as user reviews and a shopping cart for purchasing multiple games in a single transaction.

In any case, none of the competing stores have dislodged Steam from its role as the most important sales channel for PC games, and Valve employee testimony and corporate records disclosed in the case illustrate the aggressive ways the company has interacted with the developers that rely on it. Emails indicate Valve employees once threatened to delist all editions of Ubisoft’s Rainbow Six Siege “by end of day tomorrow” after they learned the publisher was marketing a separate $15 “starter pack” exclusively on its in-house Uplay store. In 2017, Kassidy Gerber, who works in business development at Valve, wrote to Warner Bros. executives that preorders for its new Middle-earth: Shadow of War game had been deleted from Steam because the price was “significantly higher than what was available at other retailers for the same version of the game.” Within hours, Warner Bros. Interactive Entertainment President David Haddad was trying to get on the phone with Gerber to make amends. (Ubisoft and Warner Bros. declined to comment.)

When asked in a deposition if Steam has a policy requiring pricing parity for games, Gerber denied it was a “policy,” claiming the entire concept was alien to a place like Valve. “I don’t really know what you mean by ‘policy,’” Gerber said. “In general, I don’t feel like we have a lot of policies. That sounds kind of bureaucratic to me.” In response, a lawyer for the plaintiffs read verbatim from what Gerber herself had told a developer: “Steam’s policy has always been to require material parity for things we sell on the Steam Store.” (Gerber replied that she didn’t remember saying that. She didn’t respond to Businessweek’s request for comment.)

In fact, Valve had to cite this rule so often that when game makers emailed its business team asking for clarity on related terms, staffers defaulted to repeating variations of this parity clause in response. An internal message cited in a motion in the Wolfire case shows one Steam business employee joking that he was going to get the language “tattooed on my back like it’s the Declaration of Independence.”

These days, Newell lives full time at sea with his three cats, gaming and scuba diving in his free time while also keeping tabs on Valve and other tech investments remotely. Rosen, who is waiting — on land — for the case to proceed, is optimistic about the potential for change. In late March a judge denied Valve’s request to resolve the case before it goes in front of a jury. If Rosen prevails, he plans to seek an injunction that, if granted, could fundamentally alter Valve’s store practices.

Separately, if Valve loses in the UK case, it could be ordered to pay a penalty of as much as $900 million. The class includes not only UK-based gamers who made purchases on Steam, but also those who made purchases on other sites.

Aldora, the research firm, estimates that lowered Steam fees could send billions of dollars back into the pockets of game makers at a time of ballooning costs for development, growing competition and slimming industry margins. “There’s increasing interest \[in the case\], because developers are just suffering right now,” Rosen says. “Every percentage point makes a huge difference. Like, taking 30% of revenue can often take 100% or more of profit. And that’s just devastating.”

Yet it’s still possible that Valve’s fortunes could change without a court injunction. Even before courts and regulators ordered Apple to alter its App Store rules, it spent so many years defending its mobile platform that the distraction may have contributed to it falling behind in artificial intelligence. Its iron grip on iPhone app sales also damaged the once-adoring relationship it had with developers, some of whom have chosen not to build services for hardware products such as its Vision Pro headset.

When surveyed, many gaming product managers have said they expect rival stores to become part of their distribution strategy in the coming years. For now, though, they’re adding more content to Steam itself. The number of games on the platform has increased on average 18% each year since 2020, according to SteamDB, which compiles data about the platform. The market is so saturated that developers complain it’s hard for gamers to find their wares. Meanwhile, Valve had only 79 people dedicated to Steam at last count, drawing in gobs of profit. Lord GabeN may be living far outside the ramparts these days, but the fortress appears as impenetrable as ever.

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