Virtual Legality

Virtual Legality is a continuing series discussing the law, video games, software, and everything digital, hosted by Richard Hoeg, of the Hoeg Law Business Law Firm (Hoeg Law).

FTC Takes on Genshin Impact | Loot Boxes, Dark Patterns, and Legal Showdowns

Jan 29, 2025 • 76 mins

In this episode, Richard Hoeg examines the FTC's lawsuit against Genshin Impact, focusing on loot boxes and transparency. He discusses the FTC's charges, including concerns over "dark pattern tactics" and COPPA compliance, and the implications for free-to-play games. The episode explores Hoyoverse's business practices, misleading loot box disclosures, and the FTC's authority under sections 5 and 6g. Richard also addresses marketing to children, settlement terms, and the broader impact on the gaming industry, concluding with a look at internal FTC debates.

Key Points

The FTC's enforcement against Genshin Impact highlights the ongoing debate over whether loot boxes constitute gambling and if their sale should be regulated, particularly concerning children and teens.
The settlement requires Genshin Impact to prohibit loot box purchases by players under 16 without parental consent and to offer direct purchase options with real money, signaling potential changes for the gaming industry's monetization models.
The legal authority of the FTC to regulate these practices under Section 5 of the FTC Act remains contentious, with differing opinions on the scope and appropriateness of the agency's actions in this case.

FTC ACTION https://www.ftc.gov/news-events/news/press-releases/2025/01/genshin-impact-game-developer-will-be-banned-selling-lootboxes-teens-under-16-without-parental https://www.ftc.gov/system/files/ftc_gov/pdf/cognosphere_complaint.pdf

LAWS https://www.ecfr.gov/current/title-16/chapter-I/subchapter-C/part-312 https://www.law.cornell.edu/uscode/text/15/45 https://uscode.house.gov/view.xhtml?hl=false&edition=prelim&req=granuleid%3AUSC-prelim-title15-section46

CONTROVERSY/AUTHORITY https://crsreports.congress.gov/product/pdf/LSB/LSB10635 https://businesslaw.osbar.org/2024/12/31/federal-trade-commission-non-compete-ban-december-2024-update/ https://www.beckersasc.com/asc-news/trump-administration-likely-to-end-ftc-efforts-to-ban-noncompetes-report.html https://www.econotimes.com/Lina-Khan-Resigns-as-FTC-Chair-Amid-Antitrust-Legacy-1699716 https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-cognosphere-concurrence.pdf

Speakers

Richard Hoeg

Host • 100%

Chapters

0:00	Introduction to the episode
0:46	FTC lawsuit against Genshin Impact and loot boxes
3:14	FTC's charges against Genshin Impact and transparency issues
5:25	FTC's concerns with "dark pattern tactics" and COPPA requirements
7:57	Implications for free-to-play games and FTC enforcement
10:34	Jurisdiction and legal basis for FTC's case against Genshin Impact
16:50	Specifics of COPPA rule and FTC's interpretation
20:05	Broader implications for the gaming industry and age gates
24:29	FTC's investigation into Hoyoverse's business practices
31:38	Currency and loot box practices in Genshin Impact
37:14	Hoyoverse's advertising and influencer collaborations
39:48	Misleading disclosure of loot box odds and unfair practices
47:31	Gaming business models and FTC's focus on children
51:22	FTC's authority and rulemaking under section 5 and 6g
55:50	Settlement terms and broader video game industry implications
1:00:00	Major questions doctrine and anti-delegation concerns
1:03:36	FTC and loot boxes, plus ban on noncompetes
1:05:43	Andrew Ferguson's role and allegations against Cognosphere LLC
1:07:26	Loot boxes, odds, and misleading advertising
1:09:46	Virtual currency complexity and FTC's consumer protection stance
1:12:21	Marketing to children and differing opinions within FTC
1:14:23	Conclusion, viewer engagement, and disclaimer

Transcript

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