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Is there an FTC trainwreck for Microsoft on the horizon?

6 posts in this topic

I recently saw this article on CinemaBlend about the upcoming XBOX One Youtube promotion with Machinima.


Some Youtubers have been recieving this:



According to CinemaBlend, there is also an e-mail that has surfaced on Pastebin of the full agreement to be part of the promotion, which includes a Non-Disclosure Agreement and this odd section:


You agree to keep confidential at all times all matters relating to this Agreement, including, without limitation, the Promotional Requirements, and the CPM Compensation, listed above.  You understand that You may not post a copy of this Agreement or any terms thereof online or share them with any third party (other than a legal or financial representative).  You agree that You have read the Nondisclosure Agreement (attached hereto and marked as Exhibit “A”) and You understand and agree to all of terms of the Nondisclosure Agreement, which is incorporated as part of this Agreement.



So basically the only indication that a video is a paid promotion, is the XB1M13 tag being placed on it.
Whether or not the posted e-mail is real (which is debatable), not expressly saying you are receiving compensation might violate FTC guidlines.     


§255.5   Disclosure of material connections.

When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed. For example, when an endorser who appears in a television commercial is neither represented in the advertisement as an expert nor is known to a significant portion of the viewing public, then the advertiser should clearly and conspicuously disclose either the payment or promise of compensation prior to and in exchange for the endorsement or the fact that the endorser knew or had reason to know or to believe that if the endorsement favored the advertised product some benefit, such as an appearance on television, would be extended to the endorser. Additional guidance, including guidance concerning endorsements made through other media, is provided by the examples below.

Example 7: A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge. The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.

So, is Microsoft being sneaky and underhanded with this promotion? Maybe, hard to say with all the speculation and rumor. This could potentially turn into a legal trainwreck depending on how it turns out.  

EDIT: Kotaku has an article up too.


SarcasticZebra likes this

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To quote Tom Mc Shea


I cannot believe Microsoft is trying to bar video creators from mentioning that they are receiving money for praising Microsoft. Unethical.


Hey Microsoft, if you have to pay people under the table to praise your product, it makes you look pretty damn desperate.


“video creators may not say anything negative or disparaging about Machinima, Xbox One, or any of its Games" Wow, that's really sleazy!

Cheufade likes this

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This is not a good thing at all for Microsoft and Machinima PR. It's frustrating to see YouTube channels be swayed like this, especially by a major company like Microsoft. It really is a stealthy war here, seeing the tweet from Microsoft congratulating the PS4 launch and then to see this a bit later. It makes me lose faith in both the company and the network, and it really makes me wonder what else gaming companies have done that we don't know about. 

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I think Mc Shea said it very clearly, so nothing to really add there. At least we can see what channels are trustworthy and what channels are there only for money.

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Hard to know how the FTC will react (if at all).  Technically, this does violate their rules, but this is probably fairly minor to them.   I don't see them doing anything more than slapping Microsoft and/or Machinima with a perfunctory fine, at best.

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Microsoft has been making strange moves in the game industry. Starting to believe they really do not understand who their target audience is or what they want. 

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