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All the Steam Friends and Steam Public networking goes via Steams Peer to Peer API in order to allow play between machines that may be behind NATs / firewalls. The documentation states that while they try to establish a direct connection between machines, but if this fails they can also resort to routing messages via their own backends. I suspect that if this happens round trip latency might increase.
With all of that said, we still have work to do on improving the networked experience. See this post for a technical overview of what currently affects network performance in the game.
We are currently looking into graphics performance stuff and have some good fixes just implemented. This will probably roll out as a specific update so we can see if it helps people with slowdown situations. With the current network setup this has direct implications on networked performance as well.
After that, looking at our backlog and plan, improving the networked experience is pretty high priority.
We regularly do pre-update testing between Sweden and California (thanks Billy!) to ensure that things stay solid.
I heard someone played a game between Tennessee and New Zealand that also worked...
10/10, would buy again !