The End of Steam’s Arbitration Agreement – When Class Action is Preferred

In 2024, gaming company Valve removed the mandatory arbitration clause from the subscriber agreement for its online gaming platform Steam. In a shift in legal policy, Valve now directs users to the courts to resolve disputes instead of through arbitration. The updated terms take effect either on user agreement, which includes actions like purchasing a game, or automatically on November 1, 2024, for active Steam users.

Though the reason for this change was not explicitly stated, commentaries suggest that the company may be attempting to avoid arbitration overload.

Valve has been involved in a series of legal proceedings in recent years. In 2021, 30 000 game developers filed suit against Valve in Washington, alleging antitrust violations from inflated game prices caused by Steam’s 30% commission on every game sold. The class action was certified in November and scheduled for trial in 2025. Consumers attempted to sue as a class as well but were seemingly stopped by Steam’s subscriber agreement to arbitration.

Arbitration clauses have long been a point of contention in the realm of consumer protection, as they limit the consumers’ ability to seek compensation through lawsuits. However, in this case, Valve may have abandoned its own arbitration clause because law firms and consumers have found a way to use arbitration clauses against the company by launching mass arbitration claims.

In early 2023, a law firm’s social media campaign recruited over 50 000 Steam users to bring antitrust claims against Valve in arbitration. Later that year, Valve sued the law firm, Zaiger LLC, alleging that it targeted Valve in a scheme to recruit large numbers of clients for arbitration claims to burden Valve with over $225 million in arbitration fees. The arguments in that case noted that prior to Zaiger LLC’s involvement, Valve had only 2 arbitration cases between 2017 and 2022. Now, Valve faces overwhelming financial costs due to mass arbitration claims and has cancelled its arbitration clause. Further, Valve petitioned to enjoin all pending arbitrations on the basis that there was no longer an arbitration agreement between the parties.

This may mark a turning point for the use of mandatory arbitration clauses, not just for gaming companies like Valve, but more broadly among large corporations. As mass arbitration becomes a more common tactic used by consumers, corporations may find themselves unable to handle such a caseload or its associated costs.

For example, in 2020, Comcast and AT&T faced a similar conundrum when consumers under forced arbitration banded together to file arbitration requests all at once. This tactic also saddled DoorDash with costs in the millions, resulting from 6000 claims. Amazon also dropped its arbitration clause in 2021.

If mass arbitration attempts continue, arbitration may no longer be the quicker and more cost-effective alternative to court proceedings, and companies are likely well aware of the threat this poses.

What do you think about arbitration clauses and how they can be used to help or hurt consumers? Are class action lawsuits a better way to demand compensation? Or does the removal of arbitration clauses mean that we are back where we started with broad consumer protection schemes?

Sources:

• https://www.reuters.com/legal/litigation/why-gaming-company-valve-would-rather-face-consumer-class-action-than-2025-03-10/
• https://www.pcgamer.com/gaming-industry/valve-will-see-you-in-court-no-really-steam-s-just-updated-its-subscriber-agreement-so-that-all-disputes-and-claims-proceed-in-court/
• https://www.legal.io/articles/5540864/Valve-Removes-Mandatory-Arbitration-from-Steam-Subscriber-Agreement