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FTC’s $520M Fortnite fine marks a new era: regulation of design

FTC’s $520M Fortnite fine marks a new era: regulation of design

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Fortnite on a Nintendo Switch

Photo: Wachiwit (Shutterstock)

In a blanket settlement announced Monday, the Federal Trade Commission fined Epic Games a whopping $520 million after accusing the Fortnite maker of various unsavory business practices. The complaint touches on a range of issues, from alleged violations of children’s privacy to deceiving users into making unintentional purchases, but there is one overarching issue: deceptive design.

Epic agreed to make a number of changes to its interfaces as part of the settlement, such as:

“Epic used privacy-invading defaults and deceptive interfaces that tricked Fortnite users, including teens and children,” FTC Chair Lina Khan said in a statement. “Protecting the public, and children in particular, from online privacy intrusions and dark patterns is a top priority for the Commission, and these enforcement actions give businesses a clear signal that the FTC is taking action to stop these illegal practices.”

After years of debate, regulators are targeting the manipulative forces of digital interfaces, and the government seems poised to take action.

“The FTC has worked on deceptive design practices for years, but this is the biggest enforcement advance we’ve seen,” said John Davisson, process director and senior counsel at the Electronic Privacy Information Center, better known as EPIC (unrelated to epicgames).

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Lawmakers have a newfound eye for the flaws in digital design. They pay more attention to layout and design on the web. An update to the California Consumer Privacy Act last year banned 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 when designing online services. A similar UK law of the same name went into effect last year and netted TikTok $30 million. New York State is considering an even more aggressive custom design law for children. US government agencies are also taking the mantle: the FTC hosted a workshop on dark patterns in 2021.

“There has definitely been a shift towards regulation of design,” said Justin Brookman, director of technology policy at Consumer Reports and former director of technology research at the FTC. “It is recognized that decisions about platform architecture are within the bounds of what regulators can aspire to, and more thought is being given to requiring companies to consider other values ​​when designing products.” (Disclosure: This reporter used to work in Consumer Reports’ journalism department, which is separate from the advocacy department where Brookman works.)

Regulatory design is complicated. You can influence user behavior by making one button blue and the other red, but nobody wants the government to dictate colors on websites. In cases like Fortnite’s, however, the issues are a bit clearer.

Epic’s “counter-intuitive, conflicting, and confusing button configuration” enticed gamers into making hundreds of millions of dollars in unwanted purchases, the FTC said. Players could accidentally buy things when trying to wake the game from sleep mode or by tapping the Buy Now button that’s right next to the preview toggle, for example. When over a million users complained about the issue, Epic reportedly ignored them. “Through internal testing, Epic intentionally obscured the cancellation and refund features to make them more difficult to find,” the FTC said. Epic froze users’ accounts when they tried to dispute charges with their credit card companies.

Epic issued a statement about the settlement and its 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 accepted 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 shake up companies, they will look closely at what the FTC sees as manipulative design to ensure they are not engaging in the same practices,” EPIC’s Davisson said.

Perhaps the most surprising part of the deal has to do with Fortnite’s voice chat feature. Chats were enabled by default, even for children, putting children at risk of harassment or even sexual abuse. According to the FTC, this violated unfair business practice laws. What sets this argument apart, however, is that it treats the voice chats as inherently dangerous and is therefore subject to regulatory scrutiny.

“To say that enabling voice chat by default is inherently harmful is a brand new principle for the FTC. I can’t think of any comparable cases where they said that this type of design decision was inherently harmful,” Brookman said.

This logic could have broader implications when considering other technical features and services that may come with built-in risks. Think, for example, of the criticism that TikTok’s algorithm is too addictive, or Instagram’s links on suicidal thoughts and eating disorders in teenage girls.

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

According to Davisson, Fortnite’s postponement is encouraging, especially considering dark patterns related to privacy issues. “There is an evolving understanding and increasing acceptance that platform and website design is an important factor in extractive commercial surveillance,” Davisson said. “It’s something that needs to be addressed as part of a broader privacy push.”

Update: 12/21/2022 5:00 PM ET: This story has been updated with an explanation from Epic.

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