Bulletins

PlayStation owners sue Sony for alleged monopoly on digital game purchases

Restricting access to alternative digital game purchases has caused a spike in prices, the complaint alleges.

PlayStation 5

Sony's console platform restricts purchases to the PlayStation Store, resulting in a lawsuit filed Thursday.

Image: Sony

PlayStation owners have sued Sony over what they allege is unlawful and monopolistic behavior with regard to restrictions on digital game purchases. The lawsuit, filed in California early Thursday morning and first reported by Bloomberg, is seeking class-action status and addresses issues with digital software distribution that sit at the heart of the ongoing Epic Games v. Apple antitrust trial.


In this case, the plaintiffs accuse Sony of artificially inflating prices of PlayStation games through its digital storefront, the PlayStation Store, and restricting both game makers and consumers from purchasing games elsewhere. The complaint cites Sony's decision in 2019 to no longer allow retailers to sell PlayStation Store download codes, claiming the result of that decision and Sony's longstanding restrictions barring competing purchase options on its consoles has been a markup of about 175% on digital PlayStation games relative to physical discs.

"Sony's monopoly allows it to charge supracompetitive prices for digital PlayStation games, which are significantly higher than their physical counterparts sold in a competitive retail market, and significantly higher than they would be in a competitive retail market for digital games," the complaint reads.

The lawsuit is a rare strike against what is considered an industry standard practice in the console gaming market. Yet renewed antitrust scrutiny of tech platforms and Epic's lawsuit targeting Apple and the App Store have raised critical, unanswered questions about what may be legally permissible in the market for software distribution.

At the heart of Epic v. Apple is a debate over whether smartphones, like the iPhone, should be treated differently than game consoles. Apple has argued they should not and that it competes with console manufacturers for consumer dollars on a level playing field, justifying a 70-30 revenue share and restrictions on the App Store that ban competing payment processing options and alternative storefronts (as is also the case on game consoles). Epic has argued the 70-30 revenue share and restrictions on console ecosystems is justified and irrelevant to the iPhone, a device that generates most of Apple's profits, because game console makers are selling special purpose devices at a loss and earn profit on software. Sony has twice in the last year invested heavily in Epic Games, and the two now have a strategic partnership on a number of their respective business units.

Yesterday, Xbox VP Lori Wright testified that the Xbox business model is to sell hardware at a loss, confirming that Microsoft has never earned a profit from an Xbox device sale. "The console gaming business is traditionally a hardware subsidy model," Microsoft said in a statement in response to Wright's testimony. "Game companies sell consoles at a loss to attract new customers. Profits are generated in game sales and online service subscriptions."

Latest Bulletins

Ending a project that once sought to build a world-spanning financial network, Meta announced on the Novi website Friday that the pilot test of its blockchain-based money-transfer app would end in September.

Keep Reading Show less

In the wake of privacy concerns following Roe v. Wade being overturned, Google said Friday that it will start automatically deleting location history related to potentially sensitive places.

Keep Reading Show less

Voyager Digital said Friday it is suspending trading, deposits and withdrawals, in the latest sign of the deepening crisis in the crypto markets. Voyager said the move is meant to give the major crypto broker “additional time” to look for “strategic alternatives” as the company grapples with the impact of the market slump, CEO Stephen Ehrlich said in a statement.

Keep Reading Show less

BlockFi CEO Zac Prince said his company has signed a deal giving FTX the option to buy the crypto lender for up to $240 million as part of a credit financing agreement.

Keep Reading Show less

Tesla is facing yet another racial discrimination lawsuit, this one brought by 15 Black current and former employees who are suing the company in California.

The workers said the company’s culture allowed for “blatant, open and unmitigated race discrimination” and most of the alleged behaviors are said to have occurred at the company's factory in Fremont.

Keep Reading Show less

Klarna is close to raising new funding at a valuation of about $6.5 billion, which would be far below its last round raised last year, according to the Wall Street Journal. The move is the latest sign of the effects of inflation and the economic downturn on the fintech sector and "buy now, pay later" in particular.

Keep Reading Show less

Crypto companies will have to disclose just how much climate damage is tied to the tokens they're hawking. At least in Europe, that is.

Keep Reading Show less

Gene Levoff, Apple's former director of Corporate Law, pleaded guilty to insider trading, the Department of Justice announced Thursday.

Keep Reading Show less

New York state environmental regulators have declined to extend a key permit to a controversial cryptocurrency mining operation in the state's Finger Lakes region.

Keep Reading Show less

FTX is reportedly close to gobbling up BlockFi for about $25 million, though BlockFi's CEO has dismissed the talk as "market rumors."

Keep Reading Show less

The CFPB said it has terminated a sandbox deal that gave earned wage access provider Payactiv “temporary safe harbor from liability” under key lending regulations.

The CFPB granted Payactiv “special regulatory treatment” in December 2020 to offer “earned wage access” products that would allow employees to obtain wages they already earned before payday.

Payactiv gets paid back through a payroll deduction from the employee’s next paycheck. The company makes money through fees.

The CFPB said it had informed Payactiv early this month that it was “considering terminating the approval order in light of certain public statements the company made wrongly suggesting a CFPB endorsement of its products.”

The company requested that the CFPB end the sandbox order after notifying the agency that it planned to modify its product fee model, the CFPB said.

The move underlined the CFPB’s increasingly critical view of sandbox deals that the agency said “proved to be ineffective.”

Safwan Shah, Payactiv's founder and CEO, is credited with coining the term "earned wage access," which has been criticized by consumer advocates as being potentially predatory, especially when it comes to workers who don’t make much money.

Shah has argued that it benefits ordinary workers, citing a dieting principle: "The less you are paid, the more frequently you should be paid," he told Protocol in a 2021 interview. "If you're going to eat 500 calories, don't eat them in one sitting. Spread them throughout the day."

Correction: This story has been updated to correct the spelling of Payactiv's name. This story was updated June 30, 2022.

Samsung announced Wednesday that it has taken a significant step toward rolling out a next-generation manufacturing technology that has the potential to reshuffle the chip industry.

Keep Reading Show less

Amazon has censored search results related to LGBTQ+ products in the United Arab Emirates after being pressured by the government.

Keep Reading Show less

Grayscale is suing the U.S. Securities and Exchange Commission after the regulator denied the company's bid to convert its bitcoin trust into an exchange-traded fund.

Keep Reading Show less

App developers in South Korea can now use third-party payment systems, Apple announced in a blog post Thursday.

Keep Reading Show less

An employee working for OpenSea's email delivery vendor misused their customer data access to download and share email addresses with an "unauthorized external party," the NFT marketplace wrote in a company blog post Wednesday. The employee worked for Customer.io.

Keep Reading Show less

Javier Soltero is leaving Google Workspace, Google Cloud CEO Thomas Kurian announced Wednesday in an email to staff viewed by Protocol. Soltero will leave his role effective July 15.

Keep Reading Show less

San Francisco-based game development tools provider Unity is laying off hundreds of employees, according to a report from Kotaku.

Keep Reading Show less

Niantic is reportedly cutting between 85 and 90 staff members, or 8% of its workforce.

Keep Reading Show less

Crypto hedge fund Three Arrows Capital has reportedly received a court order to liquidate after creditors sued the company over unpaid debts.

Keep Reading Show less

Just months after committing to spend $925 million on carbon dioxide removal, a collection of major tech companies has announced its first purchases. The group, operating under the banner of Frontier, announced it had purchased nearly 2,000 tons of CDR services from five companies. It's a small ripple in the CDR pond, but one Frontier hopes will turn into a wave to bring down the costs of removing carbon.

Keep Reading Show less

The Federal Trade Commission has sued Walmart, alleging the retail giant "turned a blind eye" to fraud worth hundreds of millions on its money transfer services.

Keep Reading Show less

Eric Schmidt described his first five years at Google as "pure, naive techno-optimism," in that the company believed that applying American values like free speech is good for the world. But Google hit a brick wall when it bought YouTube.

Keep Reading Show less

The Biden administration's hot electric vehicle summer continues to zip along. On Tuesday, the White House announced $700 million in commitments for EV charging from private companies. The cash will up U.S. charging manufacturing capacity to 250,000 chargers a year and increase the number of chargers out in the wild. Not too bad!

Keep Reading Show less

Meta said it's working to correct enforcement errors that led to the removal of Facebook posts related to abortion pills and suspensions of user accounts behind the posts. The clarification came after Motherboard discovered that Facebook was instantly removing posts that said "abortion pills can be mailed," which the FDA legalized in 2021.

"Content that attempts to buy, sell, trade, gift, request or donate pharmaceuticals is not allowed. Content that discusses the affordability and accessibility of prescription medication is allowed," Meta spokesperson Andy Stone tweeted in response to the story. "We've discovered some instances of incorrect enforcement and are correcting these."

Keep Reading Show less
Bulletins