The US trade commission has reached a proposed settlement with YouTube giant Machinima relating to charges that the gaming network “deceived consumers” over a “false and misleading” promotion that paid video creators to speak nothing but positive words about the Xbox One.
It was first reported back in 2014 that Machinima had been hired by Starcom MediaVest Group, which itself had been hired by Microsoft, to run an advertising campaign for the Xbox One and three games. Machinima subsequently paid out up to $30,000 to its YouTube content creators in the agreement that they would use Xbox One footage in their videos. They were also prohibited from "say[ing] anything negative or disparaging about Machinima, Xbox One, or any of its games,” and forbidden from discussing details of the deal publicly. This meant they couldn’t follow FTC guidelines and disclose the paid promotion.
The FTC’s complaint specifically referred to two YouTube channels, ‘SkyVSGaming’ and ‘TheSyndicateProject.’
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.
Respondent paid influencer Tom Cassell $30,000 for the two video reviews that he uploaded to his YouTube channel “TheSyndicateProject.” In his videos, Cassell speaks favorably of Microsoft, Xbox One, and Ryse. Cassell’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 Cassell disclose that Respondent paid him to create and upload them. Cassell’s first video received more than 730,000 views, and his second video more than 300,000 views.
Machinima had also promised to pay a larger group of influencers $1 for every 1,000 video views, up to a total of $25,000. The company did not require any of the influencers to disclose they were being paid for their endorsement.
The FTC announced in a press release that the two parties have come to a settlement, part of the agreement being that Machinima is prohibited from taking part in similar deceptive conduct in the future. The company is required to ensure its influencers clearly disclose when they have been compensated in exchange for their endorsements. Machinima also has the responsibility to check up on its YouTubers 90 days after a particular video has been uploaded to ensure the disclosures are still being made.
Microsoft and Starcom were also contacted by the FTC, but no action was taken against the companies as they quickly required Machinima to remedy the situation after they learned that it was paying influencers without making the necessary disclosures. The FTC said it considers Microsoft and Starcom’s role as an “isolated incident.”