The $5b Sony Lawsuit Explained

Sony is being sued for taking 30 percent of each sale of its digital stores. What does that mean for the media giant – and what does it mean for consumers?

News of this – originally from Sky – has been met with a giant collective question mark on the internet. But is there anything to it?

The reality is that if this is successful, it could have wide-ranging implications across the industry.

But that if is doing a lot of heavy lifting.

What Has Happened?

In a recent lawsuit against Sony, the company is facing allegations of patent infringement that could result in a $5 billion payout. The case has garnered attention from legal experts around the world, including extradition defense lawyers who specialize in international legal disputes.

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Sky reports that the lawsuit hinges on Sony breaching “competition law by abusing its market power to impose unfair terms and conditions on game developers and publishers, forcing up prices for consumers”.

Those filing the claim say charges are “out of all proportion to the costs of Sony providing its services”.

This is related to the 30 percent commission Sony takes on every sale on its digital stores. That counts for both the price of full games and DLC/microtransactions.

Anyone in the UK who has purchased digital content from PlayStation since August 19, 2016 will be included in the lawsuit. That means that Sony fans from the last six years could receive anywhere from £67 to £562 if the company loses. You are automatically included in the lawsuit.

But Will It?

The answer on everybody’s lips this morning has been that this is an open and shut case. It’s hard to say that with any degree of certainty, because although the documents have been given to the Competition Appeal Tribunal, they have not yet appeared for the public to read.

But the crux of the case is whether Sony has used its market power to impose unfair terms.

It’s really important to note that this doesn’t seem to be directly about the 30 percent, which as anybody will tell you is a market standard. It’s not even about the price of games. Epic take less of a cut, and charge as much as PlayStation.

Those filing the suit have to prove on the balance of probabilities that Sony and PlayStation – because they’re Sony and PlayStation – were able to get an advantage through unfair terms and conditions. That is a much smaller issue to prove than that a general 30 percent cut was unfair on customers.

It’ll be interesting to see how they argue these things from the perspective of consumers, rather than developers. I don’t buy the press release approved quotes relating to the cost of living.

What Might This Mean?

Realistically, this is an uphill struggle, as any lawsuit should be. But it’s not as frivolous as some might be claiming.

If Sony, as market leader, has hurt its consumers through unfair terms and conditions, this could have wide-ranging implications going forward.

On a console manufacturer level, Sony as market leader would have to watch its step or risk another lawsuit. Keep in mind, this is a civil matter.

It’ll mean very little for consumers directly, but would probably mean changes behind-the-scenes. Some might lead to lower prices, although, again, the 30 percent taking would probably remain.

It could weaken the power of the market leader going forward – whoever that might be. This isn’t a bad thing.