ENCORE: Epic Pays Up For Privacy Violations

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Netsuite is the number one cloud financial system, streamlining accounting, financial management, inventory, HR and more. Head over to Netsuite.com slash Bwdaily to learn more and download Netsuite's KPI checklist for free. Hey listeners, David here. Hope you're having a great new year this week we're airing the first five episodes of last year.

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The idea here is to look back.

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At the way things were at the beginning of 2023 before we kick off 2024. We'll be back next week with all new episodes.

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Enjoy. I'm David Brown and this is business wars daily. On this Thursday, January 12 today, a story about crime, punishment and video games. Epic Games, that's the company behind Fortnite, had to pay a rather Epic fine to the Federal Trade Commission recently $520,000,000, to be specific, divided into two separate settlements. Epic will pay 275,000,000 for allegedly violating the Children's Online Privacy Protection act, or Kappa. That's the largest ever penalty for violating an FTC rule, according to TechCrunch. Epic will also dole out another 245,000,000 to refund customers for what the FTC calls, quote, dark patterns, end quote. Sounds ominous. And according to the FTC, ominous is probably the right word for what Epic Games was doing. 400 million people around the world play Fortnite, and a substantial number of those players are kids under 13.

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The FTC claimed kids registering for the game would be required to share their names and email addresses, often without parental consent. Regulators claimed that Epic Games launched Fortnite with no parental controls and minimal privacy settings. In 2019, Epic finally instituted an age gate meant to keep younger players safe. But as the FTC claims, the company didn't apply that age gate to the hundreds of millions of Fortnite players who already had accounts. And regulators also took issue with Epic's live text and communication features. Those features turn on by default, and the FTC claims that children were subjected to harassment and abuse because of them. All of that bad behavior is why the FTC says Epic violated Coppa. The refunds, meanwhile, are coming because Epic allegedly made it extremely easy to make in game purchases.

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The game is free to play, but like many video games, users can make in game purchases using real money. The FTC claimed that the game's, quote, counterintuitive, inconsistent and confusing button configuration led players to incur unwanted charges based on the press of a single button, end quote. All this, according to the FTC, had cost consumers millions in illegal charges. For its part, Epic says it's accepted the agreement and pointed to a new policy it rolled out last month that tries to prevent kids under 13 from registering without parental permission. Epic will further be required to adopt strong privacy settings for its youngest players and make sure voice and text communications are turned off by default. Epic will now join the ranks of TikTok and YouTube, both of which were fined in recent years for violating cop up provisions.

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And one of Epic's chief rivals may also know a thing or two about tangling with regulators. In 2021, Activision Blizzard agreed to pay $18 million to settle a civil rights complaint. The Equal Employment Opportunity Commission, a federal employment agency, accused activision of sexual harassment and discrimination against female employees. Activision denied any wrongdoing but still paid up. The company is still embroiled in some drama. Microsoft has been seeking to acquire Activision for almost a year now, but has faced obstacle after obstacle. The FTC filed suit last month to block the deal, and ten gamers soon followed with their own suit in U. S. Federal court. We'll keep you posted on how all that shakes out. In the meantime, Epic Games is headed to the bank to make some Epic withdrawals from wondering this is business wars daily. I'm your host, David Brown.

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Written and produced by Jessica Yaramoski. Our executive producers are Tina Rubio and Marshall Lubi.

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