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  • Writer's picturePham Ba Thien

Legal commentary on Steam Platform being "blocked" after over 15 years of operation in Vietnam

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The video game market in Vietnam, in general, and the Vietnamese gaming community, in particular, are abuzz with the recent event where Steam, a globally renowned internet game distribution platform, has been "blocked" in Vietnam since the beginning of May this year. Numerous heated debates and speculations have arisen about the reasons why Steam was suddenly blocked by the local internet providers after operating for more than 15 years in the Vietnamese market. Currently, there has been no official announcement from the State regulatory authorities or from the Steam service provider regarding this issue. This article will thus comment on some legal issues surrounding the reason why Steam is being restricted in Vietnam.


A. INTRODUCTION TO STEAM AND STEAM SERVICES IN THE VIETNAMESE MARKET


Steam is a digital distribution platform for video games developed by Valve Corporation, a renowned American technology company specializing in game development, publishing, and digital distribution ("Valve"). Launched in 2003, Steam's core service is to provide a digital environment that allows users to purchase, download, and install video games on their personal computers, automatically update purchased games, and offer online gaming services on the personal computer ("PC") platform for many popular operating systems, including, but not limited to, Microsoft Windows, MacOS, and Linux.


Over time, Steam has expanded its platform to integrate additional services that emphasize social interaction, allowing users who are gamers to interact with each other and with game developers. As of the time of this writing, Steam's services include:

  • Steam Store: A digital distribution service that allows users to purchase and download games or software from the Steam platform to their PCs. This includes games owned/developed by Valve and those from third-party publishers.

  • Steam Community: A social network service where users can join forums and groups to discuss and share content related to games distributed on the Steam platform. Steam Community later integrated personal profile pages (Steam Profiles) that users can customize, similar to Facebook.

  • Steam Workshop: A content-sharing service that allows users to share user-generated mods, maps, and other game customizations.

  • Steam Cloud: A cloud storage service that enables users to save game progress, allowing them to download game saves and continue playing from any device.

  • SteamVR: A virtual reality service for gaming, which includes (i) the sale of VR hardware (SteamVR headsets) and (ii) the sale of VR-related software and games.

  • Steam Broadcasting: An online game streaming service that allows users to broadcast their gameplay.

  • Steam Marketplace: An e-commerce platform that allows Steam users to buy, sell, and trade in-game items.

  • Steam Direct: A game publishing service that allows game developers to publish their games directly on the Steam platform.

(In the context of this article, referred to as "Steam Services")


With support for 24 languages, including Vietnamese, Steam Services easily reaches users worldwide, distributing over 100,000 games (including those published by Valve itself) and updating with 6,000 - 8,000 new games annually.


As of the time of this writing, all aforementioned Steam Services are fully available to users in the Vietnamese market, and most of the games distributed globally by Steam can be purchased in Vietnam. As an emerging market with a very high internet usage rate in Asia, Steam has been growing at a remarkable rate in the Vietnamese market.


However, starting from last May, the gaming community in Vietnam was stunned by the event where Steam suddenly became inaccessible in Vietnam. Specifically, when accessing the Steam application on a PC or mobile device, the Steam Store could not be accessed, meaning that users were unable to purchase games distributed on the Steam platform. The other services of Steam continued to operate normally.


The blocking of Steam has raised many questions regarding the legality of Steam's operations in Vietnam. According to the relevant regulatory authorities, Valve does not have any commercial presence in Vietnam for providing Steam services as mentioned above. In other words, it can be argued that Valve has been providing Steam to users in Vietnam in the form of cross-border services and there has been no confirmation that Valve has obtained all the necessary licenses and approvals for providing Steam services cross-border into the Vietnamese market. A major Vietnamese online newspaper, VnExpress, reported that according to the Broadcasting and Electronic Information Authority of the Ministry of Information and Communications, the two main reasons for Steam being blocked are the distribution of unlicensed games in Vietnam and the lack of a contact point in Vietnam to coordinate with authorities in managing and ensuring legal compliance.


This article thus provides a legal commentary on Valve's provision of Steam Services in Vietnam concerning the two issues that are being closely followed by the public and the gaming community: (i) whether Valve is permitted to provide Steam Services cross-border into the Vietnamese market, and (ii) whether Valve is required to obtain relevant licenses to conduct its Steam Service business in Vietnam.


Please note that the author does not comment on or analyze other legal issues beyond the two aforementioned issues, such as licenses and approvals related to legal compliance during Valve's operation of Steam Services in Vietnam, as well as issues related to tax obligations arising from the business activities of Steam Services.


B. IS VALVE ALLOWED TO PROVIDE STEAM SERVICES CROSS-BORDER?


First, Steam Services can be categorized into the following four business sectors:

(i) Social Network Services: Steam Community, Steam Workshop

(ii) E-commerce Platform Services: Steam Store, Steam Marketplace

(iii) Software Implementation, Data Processing, Database Services: Steam Cloud, Steam VR, Steam Broadcasting, Steam Direct

(iv) Online Video Game Provision Services: For the business of games developed and published by Valve through Steam, such as Dota 2, Counter-Strike, Team Fortress, Left 4 Dead.


Based on international trade agreements to which Vietnam is a party and relevant Vietnamese laws on foreign investment, these four sectors can be provided by a foreign investor in the Vietnamese market. The question is whether Valve's provision of Steam Services to Vietnamese users in the form of cross-border supply complies with relevant international trade agreements and Vietnamese laws?


Currently, there is no legal document that provides a specific definition for the concept of "cross-border supply" (or cross-border provision). However, referring to Article 10.1, Chapter 10, of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), cross-border supply of services can be understood as the direct provision of services by an individual or legal entity to users in the territory of another country without the provider having a commercial presence in the recipient country.


From a legal perspective, Valve, as a foreign investor of American nationality, is providing Steam Services cross-border into the Vietnamese market. It is necessary to assess how the three business sectors of Steam Services are regulated based on:

(i) Vietnam's WTO accession commitments in trade and services under Document No. 318/WTO/CK, Annex, Annex on Specific Commitments on Services (collectively referred to as "WTO Commitments"); and

(ii) The United Nations Central Product Classification (CPC) system referenced in the WTO Commitments ("CPC Codes").


As a general principle, a foreign company wishing to provide services in the Vietnamese market must assess the market access level of Vietnam to that foreign investor based on international treaties to which both Vietnam and the country of the foreign company's nationality are members. In the context of this article, since both Vietnam (the country where Valve provides Steam Services cross-border) and the United States (the country of Valve's nationality) are members of the WTO, evaluating Vietnam's market openness under the WTO Commitments is crucial.


Service sectors in the WTO Commitments are divided into three categories:

  • Unrestricted Sectors: Clearly specified in the WTO Commitments, where Vietnam allows foreign investors to fully engage in these business sectors without restrictions, similar to domestic investors.

  • Uncommitted Sectors: Clearly specified in the WTO Commitments, where Vietnam does not allow foreign investors to engage in these business sectors.

  • Unlisted Sectors: Not specified or mentioned in the WTO Commitments. Generally, for these sectors, foreign investors must obtain approval from the relevant Vietnamese authorities on a case-by-case basis, according to domestic laws related to that business sector.


Accordingly, the three business sectors of Steam Services referenced according to the WTO Commitments include:

No.

Service name

Under the WTO Commitments

Level of market access

1

Social Network Services

-

Unlisted

2

E-commerce Platform Services

-

Unlisted

3

Software Implementation, Data Processing, Database Services

  • Software Implementation Services, CPC Code 842.

  • Data Processing Services, CPC Code 843.

  • Other Computer Services, CPC Code 849.

Unrestricted with regard to the modes of cross-border supply and supply through  commercial presence

4

Online Video Game Provision Services

Video Game Business, CPC Code 964.

Uncommitted for cross-border supply of services

For the commercial presence method, foreign investors are allowed to provide services in the form of business cooperation contracts or joint ventures with Vietnamese partners already permitted to provide these services. The foreign capital contribution in the joint venture must not exceed 49% of the legal capital of the joint venture.

Therefore, it can be seen that according to the WTO Commitments, Valve is allowed to provide the "software implementation, data processing, database services" of Steam Services cross-border into the Vietnamese market, including Steam Cloud, Steam VR, Steam Broadcasting, and Steam Direct.


However, for two groups of Steam Services, "social network services" and "e-commerce platform services," Vietnam has no market access commitments in the WTO Commitments. This means that Valve's provision of these two services cross-border into Vietnam is not automatically compliant with the law. Hence, the relevant state authority will rely on domestic regulations to evaluate the conditions that foreign investors must meet when providing these services in Vietnam. According to domestic regulations, Valve will need to establish a commercial presence in Vietnam, which will be analyzed in detail in Part C of this article.


Finally, for the business of Valve's self-developed games in Vietnam through Steam Services (including both online and single-player games), Valve is not permitted to provide these services cross-border because Vietnam has not committed to opening the market for this mode of service provision, as shown in the WTO Commitments. Instead, Valve will need to operate through a commercial presence in Vietnam in the form of (i) a business cooperation contract, or (ii) a joint venture with a Vietnamese partner already authorized to provide online gaming services, with the foreign capital contribution in the joint venture not exceeding 49% of the legal capital of the joint venture.


In conclusion, to fully provide Steam Services in the Vietnamese market, Valve cannot do so through cross-border supply. Specifically, only the "software implementation, data processing, database services" of Steam Services, including Steam Cloud, Steam VR, Steam Broadcasting, and Steam Direct, can be provided cross-border by Valve. For the other three groups of services, Valve must establish a commercial presence in Vietnam and obtain all necessary operational licenses before conducting Steam Services in Vietnam.


C. COMMERCIAL PRESENCE AND LICENSES FOR OPERATION IN VIETNAM


According to Article 1.2(c) of the General Agreement on Trade in Services (GATS) of the WTO, "commercial presence" is a mode of supplying services of a member country by establishing a commercial presence in the territory of another member country. Also, under Article 28 of GATS, "commercial presence" includes legal entities (such as subsidiaries), branches, and representative offices.


Additionally, according to Appendix IV of the Law on Investment 2020, "E-commerce activities," "Social network services," and "Online gaming business" (i.e., groups (ii), (iii), and (iv) of the Steam Services) are all conditional business investment sectors. Therefore, under Article 5.1, and Article 7.2 of the Law on Investment, foreign investors engaging in these conditional business investment sectors must meet the corresponding conditions as prescribed by laws. Specifically, in this case, Vietnamese law requires the issuance of sub-licenses for each group of services, necessitating that Valve establish a commercial presence in Vietnam to obtain the relevant sub-licenses.


1. Trading License Requirements


According to Article 5.1(h) of Decree No. 09/2018/ND-CP ("Decree 09"), enterprises providing e-commerce services must obtain a Trading License. This regulation also specifies that the Trading License is only granted to "foreign-invested economic organizations." Article 5.22 of the Law on Investment 2020 defines "foreign-invested economic organizations" as "economic organizations with foreign investors as members or shareholders."


From these regulations, a foreign investor providing e-commerce services must do so through a "foreign-invested economic organization," meaning the investor must establish a commercial presence in Vietnam. This presence is typically in the form of a wholly foreign-owned subsidiary or a company where the foreign investor is a capital-contributing member or shareholder.


Therefore, under Vietnamese laws, Valve is not permitted to provide the e-commerce platform services (Steam Store, Steam Marketplace) of Steam Services in Vietnam through its current cross-border supply model. Instead, Valve must satisfy the following conditions:

(i) Establish an economic organization in Vietnam with Valve's investment, i.e., change from cross-border supply to supply through a foreign investor's commercial presence in Vietnam. The economic organization must meet the conditions to be granted a Trading License as per Article 9 of Decree 09; and

(ii) Obtain a Trading License for the aforementioned economic organization to provide e-commerce service.


2. Requirements for Establishing a General Information Website License and a Social Network License


According to Article 23.4 of Decree No. 72/2013/ND-CP and its amendments and supplements ("Decree 72"), organizations and enterprises are only permitted to establish social networks if they have been granted a General Information Website License and a Social Network License (collectively referred to as "Social Network Establishment License"). Additionally, according to Clause 5 of this Article, one of the conditions for being granted a Social Network Establishment License is that the applicant must be an organization or enterprise established under Vietnamese laws with functions, tasks, or registered business lines that match the services and information content provided.


Therefore, similar to the conditions related to providing e-commerce platform services, Valve is not permitted to provide the social network services of the Steam Services cross-border but must satisfy the following two conditions:

(i) Establish an economic organization in Vietnam with Valve's investment that meets the conditions to be granted a Social Network Establishment License according to Clause 5, Article 23 of Decree 72 and its amendments and supplements, and

(ii) Obtain a Social Network Establishment License for the aforementioned economic organization to provide social network services.


3. Requirements for G1 Video Game Service Provision License


As explained, in addition to distributing third-party games on the Steam platform, Valve also develops and publishes its own games for users in Vietnam. These Valve games can be divided into two groups: online games (multiplayer games) and offline games (single-player games). Obtaining a license to provide video game services is mandatory for Valve's business of online and offline games since Valve distributes these games through a digital environment, meaning users purchase and download the games directly from the Steam platform to their PCs. These licenses are not applicable in the case of physical game sales, where games are sold to users in the form of game cartridges or physical discs.


According to Article 31.1(a) of Decree 72, G1 video games are games that involve interactions between multiple players simultaneously through the enterprise's game server system. For example, Valve's famous online games such as Dota 2, all Counter-Strike versions, and Team Fortress 2 are classified as "G1 video games" under the provisions of Decree 72.


Article 31.2 of this Decree stipulates that an enterprise is allowed to provide G1 video game services when it has (i) a G1 Video Game Service Provision License (referred to as "G1 Game Provision License"), and (ii) a Decision approving the content and script issued by the Ministry of Information and Communications (referred to as "G1 Game Content Approval Decision") for each G1 game intended for business.


Article 32 of Decree 72 prescribes the statutory conditions for obtaining a G1 Game Provision License and a G1 Game Content Approval Decision, accordingly:

(i) One of the mandatory conditions for obtaining a G1 Game Provision License is that the applicant must be an enterprise established in accordance with Vietnamese laws, with the business line of providing online game services registered on the National Business Registration Portal of that enterprise; and

(ii) One of the mandatory conditions for obtaining a G1 Game Content Approval Decision is that the enterprise must have a G1 Game Provision License with at least 01 year of validity remaining.


Additionally, in conjunction with the content in the WTO Commitments as analyzed in Part B of this article, to establish an enterprise to apply for a G1 Game Provision License, Valve's enterprise must enter into a business cooperation contract or establish a joint venture with a Vietnamese partner already authorized to provide this service. Valve's capital contribution in the joint venture must not exceed 49% of the legal capital of the joint venture.


4. Requirements for G2, G3, and G4 Video Game Service Registration Certificates

Unlike G1 games, Article 31 of Decree 72 defines the following:

  • G2 video games: Games with interaction between the player and the enterprise's game server system only

  • G3 video games: Games with interaction between multiple players but without interaction between the players and the enterprise's game server system

  • G4 video games: Games downloaded via the internet without interaction between players and without interaction between the players and the enterprise's game server system.


Due to the simpler structure and interaction characteristics of G2, G3, and G4 games, as well as the lower potential risks related to cybersecurity and personal information, the conditions for obtaining licenses for G2, G3, and G4 electronic game services are generally less stringent than for G1 games (requiring registration certificates instead of licenses). Some of Valve's popular games classified in these groups and available on Steam include the Half-Life and Portal series.


According to Article 31.3 of Decree 72, an enterprise can provide G2, G3 and G4 game services when it obtains (i) a Registration Certificate for providing electronic game services and (ii) a notification of service provision for each game. Similar to the G1 Game Provision License, according to Article 33 of this Decree, one of the most crucial conditions for obtaining the certificate is that the applicant must be an enterprise established under Vietnamese law with the business line of providing online game services registered on the National Business Registration Portal. This enterprise must also meet the joint venture condition with a domestic partner, with the foreign capital contribution in the joint venture not exceeding 49%, as analyzed in the previous sections.


From the above analysis, to fully and comprehensively provide Steam Services in the Vietnamese market, Valve must:

(i) Establish a commercial presence in Vietnam. Specifically, establish an enterprise with Valve's investment and simultaneously engage in a joint venture with a domestic partner according to the WTO Commitments, with Valve's capital contribution in the joint venture not exceeding 49%.

(ii) Obtain all the necessary licenses mentioned above for Valve's commercial presence before starting to provide Steam Services in Vietnam.


D. CONCLUSION


From the analysis provided, it can be concluded that Valve's current provision of Steam Services in the Vietnamese market is not in compliance with the international agreements to which both the US and Vietnam are members, nor with Vietnamese laws. This conclusion aligns with the perspective of the relevant state authorities as mentioned at the beginning of this article. Specifically, Valve lacks a commercial presence in Vietnam and does not have the necessary licenses to operate Steam Services in Vietnam.


However, Valve's current violations can still be rectified because, as analyzed, the Steam Services that Valve provides can entirely be offered in the Vietnamese market within the legal framework. The partial blocking of Steam Services by the State is not a prohibition of a business activity that is strictly forbidden by laws but is considered a sanction applied to foreign investors who have not fully complied with Vietnamese laws. If operating Steam Services were a legal prohibition, Steam would have been blocked a long time ago in Vietnam, or if recently blocked, all related services of Steam would have been entirely blocked. In reality, only Steam Store, the e-commerce platform service where Vietnamese customers buy games, is blocked, while other parts of Steam Services continue to operate normally despite Valve not complying with international agreements and Vietnamese laws.


Therefore, the blocking of Steam Store, which is just a part of Steam Services but is the revenue-generating part for Valve, is a sanction that Vietnam typically applies to foreign service providers operating in Vietnam without complying with the law. In the author's opinion, once Valve rectifies and addresses the current legal violations and complies with relevant legal regulations in the process of providing Steam Services in Vietnam, there is no reason for Valve's Steam Services to be banned in Vietnam.


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Disclaimer:

This article

  • reflects the author's subjective viewpoint on the main topic mentioned in this article, providing the best reference value at the time of publishing;

  • is not considered the viewpoint or opinion of any state agency in any case; and

  • does not constitute legal advice from Minh Thien Law and should not be applied to resolve any specific legal situation.

 

For more detailed information, please contact: info@minhthienlaw.com | thien@minhthienlaw.com

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