tsk tsk tsk
Epic Games is in trouble. The creator of the popular video game Fortnite has reached an agreement with the FTC to pay $520 million in relief over allegations that the company violated the Children’s Online Privacy Protection Act (COPPA). Allegedly, the company used underhanded tactics to cause players to make unintentional purchases.
Epic will pay $275 million for violating COPPA, and $245 million to refund customers. It is a record-breaking punishment, the largest refund ever in a gaming case, and the FTC’s most significant administrative order in history.
Fortnite is generally free to download but charges users for in-game purchases—apparently without being straightforward.
Fortnite was initially hosted in the Apple App Store but was removed in 2020 for violating app store rules. Specifically, they were removed for including a direct-payment option that went around Apple’s in-app purchasing system. At the time, Apple said in a statement:
“Today, Epic Games took the unfortunate step of violating the App Store guidelines that are applied equally to every developer and designed to keep the store safe for our users. As a result their Fortnite app has been removed from the store. Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines regarding in-app payments that apply to every developer who sells digital goods or services.”
Epic did the same thing on Android, and Google took similar actions.
The last few legislative session, lawmakers have considered bills like the much-discussed Open App Markets Act (OAMA) that would seek to force Apple and Google to host new applications on their platforms that don’t meet their current requirements and where developers could circumvent their in-app purchasing requirement—like Fortnite wanted to do. It was a state-level attempt to achieve similar ends as OAMA.
The bills have failed to gain traction and have not become law. Yet, with the national debate raging, more states will no doubt consider similar legislation this year. They should be wary of doing so. Since bills like these were introduced, Apple and Google have argued that such a move would force their companies to host apps that undermine their terms of service, designed to protect consumers’ data, privacy, and software.
The case of Epic Games shows that Apple and Google’s concern was not without warrant. Their policies are in place to protect consumers. As we’ve written before, one of the most dangerous results of such legislation is that it would weaken security; it would allow companies to do potentially—in the App Store and Google Play—what Fortnite has done. It would cripple their ability to regulate apps for safety and consumer protection, as they are open to legal action if they do not approve an app. Yet, they would be open to legal action if they allow these practices and consumers are harmed.
In the end, this case shows that these types of bills would undercut Apple and Google’s ability to take the action they took against Epic in 2020 for violating their terms of service, which we now see was justified and protective. Just ask those duped by Fortnite.