FTC Punishes Machinima for XB1M13 Marketing Campaign

[Aura7541]

Remember the XB1M13 fiasco, where Machinima paid people to say only positive things about the XBO and not disclose the fact? The FTC has reached a settlement with Machinima to make sure that does not happen again.

Around the launch of the Xbox One, the YouTube network Machinima held a special campaign for its clients: Make a positive video about Microsoft's newest console, and you'll get paid extra. Also, you're not allowed to talk about any of this.
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In a press release today, the FTC announced that the two parties have come to a settlement that will prevent Machinima from pulling this sort of shadiness again. Writes the FTC: "Under the proposed settlement, Machinima is prohibited from similar deceptive conduct in the future, and the company is required to ensure its influencers clearly disclose when they have been compensated in exchange for their endorsements."

Respondent paid influencer Adam Dahlberg $15,000 for the two video reviews that he uploaded to his YouTube channel "SkyVSGaming." In his videos, Dahlberg speaks favorably of Microsoft, Xbox One, and Ryse. Dahlberg's videos appear to be independently produced and give the impression that they reflect his personal views. Nowhere in the videos or in the videos' descriptions did Dahlberg disclose that Respondent paid him to create and upload them. Dahlberg's first video received more than 360,000 views, and his second video more than 250,000 views.

"In numerous instances, Respondent has failed to disclose, or disclose adequately, that the individuals who posted the reviews were compensated in connection with their endorsements," wrote the FTC. "This fact would be material to consumers in their purchasing decisions regarding Xbox One and the Launch Titles. The failure to disclose this fact, in light of the representations made, was, and is, a deceptive practice."

"Each violation of such an order may result in a civil penalty of up to $16,000." - I can't find it in writing, but I believe this would be leveled at Machinima. I think it's also worth noting that this is almost the same amount as Machinima paid YouTubers for the videos in the first place. Hard to see it as a stiff penalty, considering their likely profits.

The FTC waived Microsoft and Starcom of any responsibility in the matter. From the FTC: "while Microsoft and Starcom both were responsible for the influencers' failure to disclose their material connection to the companies...staff considered the fact that these appeared to be isolated incidents that occurred in spite of, and not in the absence of, policies and procedures designed to prevent such lapses." - So the FTC holds Microsoft and Starcom responsible for the ethical breach, but appears to let them off the hook simply because they have a nominal policy against it.

Original comment

- Original article from Kotaku
- GAF thread
- Original GAF thread that recorded the events surrounding XB1M13

[7H3]

wow Machinima got screwed by MS it sounds lol