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Italian Regulator's Recent Loot Box Decision Relating to Hearthstone and Overwatch [Updated]
According to notable Italian IP lawyer, Andrea Rizzi, a few weeks ago, the Italian Antitrust Authority (AGCM) published a decision concerning loot box practices in Electronic Arts’ Origin platform and its Italian website. This week, the AGCM published a similar decision about Activision-Blizzard’s (A/B) practices in connection with Battle.net and its Italian game websites, especially for Overwatch and Hearthstone. In this post, we’ll explore (to the best of my admittedly limited ability reading from an unofficial translation I made myself in Google translate of the Italian language document) the AGCM decision’s on A/B’s loot box practices.
NATURE OF THE PROCEEDING
The AGCM proceeding related to loot box practices of A/B and its European subsidiaries for several game and Battle.net websites and specifically for Overwatch and Hearthstone. The AGCM described loot boxes as a special set of in-game purchases that allow players to randomly get certain game elements, not previously known, which can directly affect game performance or consist of aesthetic decorations. The AGCM stated that reports and surveys of the A/B websites from November 2019 and January 2020 showed that they didn’t clearly highlight that the games included in-game purchases. The AGCM charged A/B on two counts:
Disseminating misleading and/or omitting information with respect to the characteristics and costs incurred in the games that featured in-game purchases and loot boxes even when such games may be used by children and adolescents. The AGCM further alleged that the lack of transparent information and presentation of Hearthstone as free appeared likely to mislead consumers regarding the game’s features and actual costs incurred for its use. This would prevent parents from making informed purchases or exercising control over the gaming activity of their children.
Including a game mechanism in Hearthstone, a PEGI 7 game (i.e. deemed usable by children and adolescents), aimed at inducing minors to make purchases (or requiring parents to do so), and disseminating messages with the same purpose. [Edit: Thanks to Mr. Rizzi for pointing out an error in Google Translate. The AGCM did not actually describe loot boxes as “gambling” as I previously mentioned, here, but simply as a “game” mechanism.]
On January 31, 2020, the AGCM notified A/B of the allegedly offending conduct and issued a request for information. A/B made defensive arguments and participated at a hearing in June 2020. Among other things, A/B argued that:
in-game purchases weren’t necessary for the gaming experience or to complete their games;
A/B had already introduced a wide range of information for consumers about how in-game purchases could be included in their games;
A/B had already made a parental control system available to parents to prevent them from making in-game purchases; and
the games and all related advertising materials, including information on the websites and on Battle.net fully complied with PEGI rules.
Nevertheless, A/B ultimately agreed, voluntarily, to make numerous commitments to the AGCM, described in the decision as Commitments A through D.
THE A/B COMMITMENTS
For “Commitment A,” relating to the messaging and marketing of games with loot boxes, A/B agreed to:
i) Show the PEGI pictogram indicating “in-game” purchases on the video game detail page in the Battle.net store accessible by Italian consumers (i.e., https://eu.shop.battle.net/it-it) in a prominent, clear position. For video games that include loot boxes, A/B also agreed to show an Italian language version of the recently introduced PEGI disclaimer informing consumers of the presence of loot boxes. In particular, A/B would show the PEGI label in the first frame of the page, in a prominent position with respect to the other content and in a clearly visible manner to consumers when first accessing the page as shown in Figure 1, below:
ii) Show the PEGI pictogram indicating in-game purchases and the PEGI disclaimer on other game sites (as technically feasible) using similar methods to the method shown above.
iii) Rephrase the caption information used in the detail pages of the video games on the Battle.net store to include: “Offers the possibility of making optional purchases” (i.e., to make it more clear and understandable for consumers). Also, to display the information in a prominent position near the box where you can proceed with the purchase, and in addition to having the PEGI label.
iv) Modify “Play for Free” (Hearthstone) and “Free for all” (Call of Duty: Warzone) used in the Battle.net store and the game websites, to insert new wording. Qualify that the games have in-game purchases and loot boxes. For example, as highlighted below in Figure 2, Hearthstone’s “Play for Free” will change to “Download Now.” Add, in a prominent position, both the PEGI in-game purchases pictogram and disclaimer language (also shown below in Figure 2). These changes also apply to Italian language social media accounts for the games as specified in an appendix to the decision.
For “Commitment B,” relating to games that implement loot boxes, A/B agreed, within 90 days, to:
i) Provide information on the probabilities of obtaining specific game items through loot boxes (or packs of cards) directly on the detail page in the Battle.net store for the relevant game by means of certain wording in capital letters: “INFORMATION ABOUT THE PROBABILITIES RELATING TO THE CONTENT OF YOUR PURCHASE” which would also contain a hyperlink to a specific page containing detailed information with the probabilities of the contents of the loot boxes, as shown below in Figure 3 for Overwatch, and Figure 4 for Hearthstone card packs.
ii) Make available to consumers information on the probabilities of obtaining certain items through loot boxes or card packs, in ways similar to the previous point, within the game store accessible during the game experience.
For “Commitment C,” relating to A/B’s parental control system already present in its online store:
i) The email sent to parents/guardians during the registration process of minor children’s accounts will continue to include a link to the Parental Control management interface on the Battle.net store and will also encourage the parent/guardian to keep the email in order to be able to effectively and quickly manage the parental control system for the account in the future.
ii) Ensure that parents/guardians are required to behave actively and consciously in allowing minors to make in-game purchases; including that “Allow in-game purchases” (or similar wording) in the parental control management interface on the Battle.net store must be voluntarily selected by the parent/guardian (by actively checking a box) rather than automatically checked, as shown in Figure 5, below.
Finally, for “Commitment D,” A/B will communicate within 90 days with third-party platforms that distribute A/B’s games, to accept the commitments referred to in the previous commitments, A, B and C.
The AGCM offers an assessment of the commitments and offers its general reflections on the commercial trend towards reliance on microtransactions, including loot boxes. The AGCM worries that in this context vulnerable children and adolescents who play games may not have the sophistication necessary to understand both the economics and psychology of mechanisms underlying game monetization, warranting maximum clarity and transparency for both consumers and parents. Having said that, the AGCM considered A/B’s commitments suitable to remedy the potential harms affecting consumers by the practices in question. More broadly, the AGCM reminded readers of the decision that administrative sanctions for violating the Italian law range from 10,000 to 5,000,000 euros and even suspension of business activity for 30 days in cases of repeated non-compliance.
In my view, it’s important to keep in mind that Overwatch is rated PEGI-12 and Hearthstone is rated PEGI-7. The fact that Overwatch was included in the decision underscores that the AGCM isn’t just concerned with the protection of children, alone, but as the decision repeatedly indicates, adolescents, also. [Edit: Again, thanks to Mr. Rizzi for pointing out that the court did not actually describe the loot boxes as “gambling” but simply as a “game” mechanism.]