Loot Box Self-Regulation Fail

 
The UK government's approach of entrusting technology companies with self-regulating gambling-style loot boxes in video games has sparked concerns, particularly as some developers tasked with establishing new industry standards have themselves violated these rules. The Guardian newspaper reports that over the past six months, the advertising regulator has upheld complaints against three companies involved in formulating industry regulations, including Electronic Arts (EA), the prominent developer, for failing to disclose the inclusion of loot boxes in their games.

An expert who filed the complaints disclosed discovering hundreds more instances of breaches but opted to submit only a select few to the Advertising Standards Authority (ASA) to underscore the issue. Despite warnings from experts associating loot boxes with gambling-related harm, the then Department for Digital, Culture, Media, and Sport announced in July 2022 its decision not to regulate them as gambling products, unlike other countries such as Belgium.

Nadine Dorries, the culture secretary at the time, cautioned against the regulation of loot boxes, citing potential "unintended consequences." Instead, the government convened a "technical working group," comprised of video game companies and tech firms, which published a set of 11 principles on loot boxes in August 2023. These guidelines include a mandate to clearly indicate in game advertisements if they contain paid loot boxes.

However, a recent examination by Leon Xiao, an expert on loot-box regulation, revealed that a significant majority of game advertisements—more than 90%—did not adhere to the group's disclosure rule. Despite the working group's efforts, numerous games advertised on platforms like Apple, Google, Facebook, Instagram, and TikTok failed to comply with the established guidelines.

The ASA upheld four complaints filed by Xiao against games developed by EA, Hutch, and Jagex—companies involved in drafting industry guidelines as members of the government's working group. While EA attributed the oversight to "human error," Jagex claimed space constraints on its Facebook ad prevented full disclosure, and Hutch asserted a misinterpretation of advertising guidance. Nevertheless, Xiao stressed that these incidents were not isolated, expressing his limitations in resources to address numerous other potential violations.

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3 April 2024

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