Machinima Reaches Proposed Settlement With FTC Over "Deceptive" Xbox Promotion

Machinima Reaches Proposed Settlement With FTC Over "Deceptive" Xbox Promotion

machinima xbox

The FTC and YouTube network Machinima have reached a proposed settlement amidst a paid Xbox endorsement controversy.

YouTube gaming network Machinima has reached a proposed settlement with the Federal Trade Commission following allegations that the network engaged in "deceptive advertising" by paying "influencers" to post YouTube videos endorsing Microsoft's Xbox One system, as well as several games. It was also alleged that video makers did not appropriately disclose that they were being paid for their opinions, as they were prohibited from discussing the particulars of their deals publicly. In the full complaint,the FTC stated that Machinima's agreement with Microsoft "promised that the influencer videos would 'not portray [Microsoft], the Xbox One, or the Launch Titles in a negative manner,' and that Microsoft could request that Respondent take down any video that violated this promise."

"Under the proposed settlement, Machinima is prohibited from similar deceptive conduct in the future, and the company is required to ensure its influencers clearly disclose when they have been compensated in exchange for their endorsements," a press release reads.

"When people see a product touted online, they have a right to know whether they're looking at an authentic opinion or a paid marketing pitch," said Jessica Rich, Director of the Bureau of Consumer Protection. "That's true whether the endorsement appears in a video or any other media."

According to the press release, the FTC has also sent a letter to Microsoft and Starcom closing its investigation into the two companies in this case. "According to the letter, while Microsoft and Starcom both were responsible for the influencers' failure to disclose their material connection to the companies, Commission staff considered the fact that these appeared to be isolated incidents that occurred in spite of, and not in the absence of, policies and procedures designed to prevent such lapses," the release reads. "The companies also quickly required Machinima to remedy the situation after they learned that Machinima was paying influencers without making the necessary disclosures."

The FTC guidelines require a full disclosure "when there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement."

At the time that these practices were uncovered, Machinima and Microsoft defended the arrangement in a joint statement, writing "This partnership between Machinima and Microsoft was a typical marketing partnership to promote Xbox One in December. The Xbox team does not review any specific content or provide feedback on content. Any confidentiality provisions, terms or other guidelines are standard documents provided by Machinima. For clarity, confidentiality relates to the agreements themselves, not the existence of the promotion."

Machinima later released an additional statement, stating that it typically requires channel partners to include certain language in their video content relating to its promotions. "That didn't happen here and we're evaluating why," the statement said. "All participants are being asked today to include our standard language going-forward. We apologize for the error and any confusion."

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Bit of a tangent thought...

Lizzy Finnegan:

"When people see a product touted online, they have a right to know whether they're looking at an authentic opinion or a paid marketing pitch," said Jessica Rich, Director of the Bureau of Consumer Protection. "That's true whether the endorsement appears in a video or any other media."

I guess things like product placement in films are exempt from this kind of disclosure since the existence of a product in a film doesn't mean it's endorsed. It does feel like a promotion though...

So let me get this straight, there's a problem with unethical people in games journalism?
This seems like a bad thing, seems like the kind of thing people might make a... hashtag about?

...And nothing of value happened.

So all the slimy little bastards got off scot free because they knew how to talk FTC down before anything happened, I'm guessing they will simply be more clever with this shit in the future and make sure the end user never knows.

At the very least FTC is taking this internet shit half way serious for once, baby steps.

Smooth Operator:
So all the slimy little bastards got off scot free because they knew how to talk FTC down before anything happened, I'm guessing they will simply be more clever with this shit in the future and make sure the end user never knows.

At the very least FTC is taking this internet shit half way serious for once, baby steps.

Well, it was either they reach settlement or both get bogged down in legal proceedings because this countries judicial system is all kinds of screwed up.

Microsoft are really committed to the belief that throwing money at the problem that is the xbone, will eventually convince everyone to accept it. I was watching some interesting detective show pilot on fox (I think) last night and the Xbone was advertised on an 8/1 ratio compared to the Piss4. They have the spare kcash, most definitely. But maybe they could spend it on something to improve the prospect of the Xbone instead of trying to convince us that it's still cool and we should totally get it for the next generation of protein spongers.

Arnoxthe1:

Smooth Operator:
So all the slimy little bastards got off scot free because they knew how to talk FTC down before anything happened, I'm guessing they will simply be more clever with this shit in the future and make sure the end user never knows.

At the very least FTC is taking this internet shit half way serious for once, baby steps.

Well, it was either they reach settlement or both get bogged down in legal proceedings because this countries judicial system is all kinds of screwed up.

Even so, usually a settlement involves some kind of penalty for the defendant, not just saying "OK we'll let you off this time, but just don't do it again" like the judge is their mom or something.

Smooth Operator:
So all the slimy little bastards got off scot free because they knew how to talk FTC down before anything happened, I'm guessing they will simply be more clever with this shit in the future and make sure the end user never knows.

At the very least FTC is taking this internet shit half way serious for once, baby steps.

This is, generally speaking, just how the FTC operates. FTC guidelines aren't laws, so unless the practice is covered by already existing federal law (ergo: fraud) they only way they can impose a legal remedy is for them to plead their case before a judge. The judge then usually hands down things like injunctions or fines.

Remember, their purpose isn't necessarily to sue and imprison people (it'd be impractical considering the fact they are dealing with corporations usually) but instead to guide behavior. They only really tend to crack down in really egregious cases, or on people who repeatedly flaunt the guidelines (and obviously so).

So Microsoft basically commits fraud together with a network best known for literally stealing other youtubers videos without even crediting them (illegal copyright infringement, but they are careful to only steal from those that cannot afford to beat them in court) and all they get is a stern talking to. Corporatocracy at its best.

-Dragmire-:

I guess things like product placement in films are exempt from this kind of disclosure since the existence of a product in a film doesn't mean it's endorsed. It does feel like a promotion though...

I guess they can always get away with "The character in the film simply likes this product" and pretend its not a promotion. Personally i dont have a big problem with product placement because the characters are using something, its quite realistic it would be one of a popular brands just by chance.

Jake Martinez:

This is, generally speaking, just how the FTC operates. FTC guidelines aren't laws, so unless the practice is covered by already existing federal law (ergo: fraud) they only way they can impose a legal remedy is for them to plead their case before a judge. The judge then usually hands down things like injunctions or fines.

Remember, their purpose isn't necessarily to sue and imprison people (it'd be impractical considering the fact they are dealing with corporations usually) but instead to guide behavior. They only really tend to crack down in really egregious cases, or on people who repeatedly flaunt the guidelines (and obviously so).

Which is why we need to support EEF, which are actually making an effort to make things like this illegal so they could be sued and fined for it instead of talked to.

 

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