FTC’s $520 Million Fortnite Fine Marks a New Era: Design Regulation

Fortnite on a Nintendo Switch

Photo: a chiwi (Shutterstock)

In a sweeping agreement announced Monday, the Federal Trade Commission fined Epic Games a whopping $520 million after accusing the maker of Fortnite of a variety of unsavory business practices. The complaint addresses a variety of topics, from alleged violations of children’s privacy to tricking users into making unintended purchases, but there is one overarching theme: deceptive design.

Epic agreed to make a number of changes to its interfaces as part of the deal, including adding friction to the checkout process to prevent accidental payments, a new instant purchase cancellation system, and turning off voice chats for minors.

“Epic used privacy-invading default settings and deceptive interfaces that misled Fortnite users, including teens and children,” FTC Chairman Lina Khan said in a statement. declaration. “Protecting the public, and especially children, from online invasions of privacy and dark patrons is one of the Commission’s top priorities, and these enforcement actions make it clear to companies that the FTC is taking action. strong against these illegal practices”.

After years of discussion, regulators are honing in on the manipulative powers of digital interfaces, and the government seems poised to move against them.

“The FTC has been working on deceptive design practices for years, but this is the biggest step in terms of compliance that we’ve seen,” said John Davisson, director of litigation and senior counsel at the better-known Electronic Privacy Information Center. as EPIC (not related to Epic Games).

Lawmakers have a new eye for digital design flaws. They are paying more attention to design and composition on the web. An update to the California Consumer Privacy Law last year forbidden dark patterns, a term for deceptive design. California passed the Age Appropriate Design Code in September, which requires companies to prioritize the safety and well-being of children in the design of online services. A similar UK law of the same name came into force last year, leading to a $30 million fine for TikTok—and New York state is considering an even more aggressive child design bill. US federal regulators are also picking up the slack: the FTC held a dark pattern workshop in 2021.

“There definitely has been a shift toward design regulation,” said Justin Brookman, Consumer Reports director of technology policy and former FTC director of technology research. “It is recognized that options on platform architecture are well within the scope of what regulators may pursue, and there is more thought to require companies to consider other values ​​in product design.” (Disclosure: This reporter previously worked in Consumer Reports’ journalism division, which is separate from his advocacy wing, where Brookman works.)

Regulating the design is complicated. You can influence user behavior by making one button blue and the other red, but no one wants the government to dictate the colors on websites. However, in cases like Fortnite, the problems are a bit clearer.

Epic’s “inconsistent, inconsistent, and confusing button configuration” tricked gamers into making hundreds of millions of dollars in unwanted purchases, the FTC said. Players could accidentally buy things by trying to wake the game from sleep mode, or by tapping the instant buy button, located right next to the item preview button, for example. When over a million users complained about the issue, Epic reportedly ignored them. “Using internal testing, Epic deliberately concealed the cancellation and refund features to make them harder to find,” the FTC said. Epic froze users’ accounts if they tried to dispute the charges with their credit card companies.

Epic issued a declaration about the settlement and his plans to address the issues raised by the FTC. “No developer makes a game with the intention of ending up here,” Epic said. “The laws have not changed, but their application has evolved and longstanding industry practices are no longer sufficient. We accept this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players.”

“This settlement will wake up companies, they will take a close look at what the FTC considers to be manipulative design to make sure they are not committing the same practices,” said EPIC’s Davisson.

Perhaps the most surprising part of the deal has to do with Fornite’s voice chat feature. Chats were on by default, even for children, exposing them to the risk of harassment or even sexual abuse. According to the FTC, this violated laws against unfair trade practices. But what sets that argument apart is that it treats voice chats as inherently dangerous and therefore subject to regulatory scrutiny.

“Saying that enabling voice chat by default is per se harmful is a whole new principle for the FTC. I can’t think of any analogous case where they would say that kind of design choice was inherently harmful,” Brookman said.

That logic could have broader implications considering other technology features and services that may have embedded risks. Think about the criticism that TikTok’s algorithm is too addictive, for example, or instagram links suicidal thoughts and eating disorders between teenage girls.

“In a sense, Fortnite is a social media platform, insofar as it has chat features, and the FTC says that companies have more of an obligation to design their systems to repudiate harm,” Brookman said.

According to Davisson, Fortnite’s change is encouraging, especially when you think about dark patterns in the context of privacy concerns. “There is an evolving understanding and acceptance that platform and website design is a major contributing factor to extractive business surveillance,” Davisson said. “That’s something that needs to be addressed as part of a broader data protection push.”

Update: 12/21/2022 5:00 pm ET: This story has been updated with a statement from Epic.

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