•Epic Games will pay $520 million in settlements to the FTC over allegations of deceptive practices and privacy issues.
• The settlement includes a $275 million penalty for violating COPPA, as well as refunds for affected users totaling $245 million.
• Epic Games has acknowledged the settlements and said that it has already implemented changes in regards to both child protections and monetization practices.
• Despite the settlements, Epic Games remains positioned as a key builder of the metaverse, with plans to continue building its LEGO-themed metaverse game world.
Epic settles lawsuit
Epic Games, made popular by the wildly successful video game Fortnite, appears to have gotten into some hot water with federal regulators. Recently, the company agreed to pay an eye-watering $520 million in a settlement with the Federal Trade Commission (FTC) over allegations related to deceptive practices and data security issues. This is one of the largest settlements between a game developer and the FTC in history. The high-severity fine is a sure sign that companies must take user privacy and regulations seriously when it comes to creating online experiences for their users. Epic Games CEO Tim Sweeney has stated that he hopes this resolution shows regulators and players alike that Epic Games takes these matters seriously, and will make sure safeguarding user data and privacy remains a top priority.
Exploring the Allegations Made by the FTC Against Epic Games
The FTC alleged that Epic Games misled its players in multiple ways. First, they claimed that Epic misrepresented how much users would save when they purchased in-game items through their own payment system as opposed to using Apple or Google’s payment systems. Additionally, they accused Epic of collecting data from children without obtaining parental consent as required by COPPA. The company was then ordered to pay a $5 million fine in addition to issuing refunds to impacted consumers.
Epic Games Acknowledgement of Settlements and Changes Implemented in Response
In response to these allegations, Epic Games released an official statement acknowledging their role in the situation and detailing changes they’ve implemented in order to ensure compliance with all regulations. They also noted that these changes are designed to enhance the user experience for all players.
Epic has created a new age gate feature for their store pages so that users must verify their age before making purchases or downloading content. They also clarified language on their website about prices when using different payment methods.Epic has promised to implement more intensive age checks and impose restrictions on excessive spending for all users. These positive steps are obviously a great step forward for protecting vulnerable consumers against predatory gaming practices.
Analyzing the Impact of the Settlements on Epic Games, Players, & Competitors
The financial implications of these settlements obviously have huge implications for Epic Games and its investors; however, it is important to note that while this settlement will cost them millions upfront — which could potentially have a negative impact on investor confidence — it may ultimately help them regain trust among its player base due to their efforts at becoming more transparent and accountable. Furthermore, it might even give them an edge over competitors who have yet to make similar changes within their own games.
Regarding players specifically, these changes will likely lead to improved security protocols which should provide greater peace of mind when making purchases or downloading content. Additionally, players can now be surer than ever before that any data collected by the game is being handled appropriately according to industry standards.
Finally, other video game companies should take note of this settlement because if nothing else it serves as a reminder of how important it is for companies in this industry — especially those with large user bases — to comply with all applicable laws and regulations related to data collection and privacy protection.
All things considered, while there are certainly some short-term costs associated with this settlement for Epic Games — including reputational damage — the long-term benefits may outweigh them significantly if they use it as an opportunity to continue improving transparency policies both internally and externally across all aspects of their business operations moving forward into 2021 and beyond! As such it will be interesting what other changes come out of this settlement in terms of how video game companies handle user data going forward.