Epic Games Fortnite Settlement to Cost $520 Million
Epic Games and the FTC have reached an agreement to settle for $520 million a case over the publisher's predatory payment and privacy practices in its hit game Fortnite. Epic also promised to do better by reforming its policies.
Lay of the Land
Fortnite is a free-to-play battle royale that boasts a low barrier to entry, helped by a cartoonish art style and "T" rating (13 & up). In other words, kids like the art style, and parents appreciate the free startup cost and less violent gameplay.
Aside from being one of the most played games currently, it was revealed by Epic’s litigation with Apple that Fortnite produces the overwhelming majority of the company's income.
- 2018: Fortnite accounted for $5.5 billion of Epic’s $5.7 billion revenue
- 2019: Fortnite accounted for $3.7 billion of Epic’s $4.2 billion revenue
- Revenue is primarily driven by the purchase of microtransactions in the form of cosmetic skins for characters
- Epic Games also runs the Epic Games Store on PC and licenses out its Unreal Engine to developers
- Fortnite often serves as a testbed and showcase of Unreal Engine’s latest bells and whistles
Where Epic ran afoul of the FTC was in targeting children in its pursuit of ever more revenue. Taken in the context of Fortnite’s appeal to younger gamers, it’s hard to see Epic’s conduct as anything other than a disturbing feature – not a bug.
- Charging the parents of children for accidental or unapproved purchases
- Freezing the accounts of those disputing credit card charges for unwanted purchases
- Collecting information on Fortnite players under age 13 without parental consent
- Enabling voice chat and text chat for children under 13 by default
- Epic made the option to disable ingame communication hard to find, despite harassment of younger gamers
The money from the Epic Games Fortnite settlement will be split between the FTC and those impacted by its conduct. The agreement also laid out several reforms.
- $275 million fine for violating the Children’s Online Privacy Protection Act
- Largest fine ever levied by the FTC for violating that law
- $245 million in refunds to injured customers from 2017-2022
- Epic will offer “an explicit yes or no choice to save payment information”
- Enabling ingame communication for children gamers will require affirmative consent
To Epic’s credit (or shame), the company is very boldly trying to spin the settlement into a positive. Despite the game’s purposeful appeal to younger audiences, the publisher insists “no developer creates a game with the intention of ending up here.” Epic also claims it is accepting the settlement in order to “be at the forefront of consumer protection” – as if gamers should be thankful that Epic will stop exploiting vulnerable customers.
What’s It to Other Publishers?
Plenty of gaming companies will claim that the whole Epic Games Fortnite case was the exception, a bad apple. But with ever-growing interest from publishers in games-as-a service, esports, and the gambling it will bring, the industry must be more proactive if it wants to avoid regulatory attention.