Epic Games reportedly has to pay the United States Federal Trade Commission (FTC) $520 million in fines. This money will be used to settle alleged Children’s Online Privacy Protection Act (COPPA) violations.
According to the FTC, Epic connected minors “with strangers” exposing them to “dangerous and psychologically traumatizing issues.” Moreover, the FTC claims Epic Games failed to introduce an adequate parental control system.
“Protecting the public, and especially children, from online privacy invasions and dark patterns is a top priority for the Commission, and these enforcement actions make clear to businesses that the FTC is cracking down on these unlawful practices,” said FTC chair Lina Khan in a statement.
CNBC is saying that Epic Games will be forced to pay two fines. One will be a $245 million fine for Fortnite‘s in-game store and refund system. Another $275 million will be used to address child privacy laws and issues.
“The laws have not changed, but their application has evolved and long-standing industry practices are no longer enough,” Epic said in a statement. “We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players.”
The Profit‘s Take:
There’s cosmic karma here. Tim Sweeney has been completely lawsuit focused, only to have the FTC turn around and slap his company with huge fines. People aren’t going to stop playing Fortnite because of this news. However, it might give more teeth to the Québec lawsuit we previously mentioned, and to angry moms everywhere. Epic’s biggest worry should be how investors view this. They attracted this. They became a lawsuit-focused company and lost sight of what they should be focused on. When you get in the mud and start fighting in the mud, you’re going to get mud on you. Even though Epic has raised a lot of money, this is a pretty stiff loss. This is way more than just a slap on the wrist. Maybe they’re trying to make an example out of Epic Games. This just proves my long-standing point that Epic Games had their focus on the wrong thing. Even after this story blows over, this could have an impact on Epic’s valuation.
(All information was provided by CNBC)