Introduction

The video games sector has been subject to increasing scrutiny by the European Union’s policy makers. In January 2023, the European Parliament adopted by a large majority the Maldonado López’ report¹  calling for stricter regulation of video games and their business models. The European Commission is currently carrying out a “digital fairness” fitness check²  to examine whether horizontal consumer law instruments (i.e. the Unfair Commercial Practices Directive, Consumer Rights Directive and Unfair Contract Terms Directive) remain adequate for ensuring a high level of consumer protection in the digital environment. The evaluation, which covers gaming related issues such as loot boxes, in-game purchases and currencies, dark patterns and the addictive use of digital products, will likely lead to a new legislative proposal in 2025. In parallel, the video game industry is one of the targets of the upcoming child safety rules, in particular the Regulation on Child Sexual Abuse³  as well as the Code of Conduct on age-appropriate design.⁴  All these new rules, if adopted, will harmonize national approaches at the EU level and likely set a global standard, as Brussels rules are often followed by regulators in other jurisdictions.

Loot boxes

Loot boxes and their effect on consumers were the key focus of the Maldonado López’ report and are currently being examined by the Commission under the ongoing “digital fairness” fitness check. The Commission’s guidance on the Unfair Commercial Practices Directive⁵  clarifies how the existing rules apply to in-game promotions advertising, children, in-game purchases and the presence of paid random content. The European Parliament has recommended assessing whether further rules, such as an obligation to disable in-game payments and loot boxes mechanisms by default or a ban on paid loot boxes, should be proposed.

A potential EU-wide prohibition of loot boxes, at least when they are likely to be accessed by minors, has also been supported by the Netherlands Authority for Consumers and Markets (“ACM”)⁶  as well as consumer organizations.⁷  As an alternative, the Dutch authority recommends clarifying the applicable legal regime and clearly regulating on issues like winning probabilities, transparency, marketing practices etc. Other solutions have been proposed to improve transparency and consumer empowerment, such as granting researchers and regulators access to the algorithms and datasets that are involved in the loot boxes to conduct independent research in the public interest, giving consumers the option to use the game without algorithmically driven decision-making that aims to influence consumer behavior, and allowing consumers to set limits to the amount of time and money they want to spend using in-app purchases in video games. The matter of loot boxes and their regulation across jurisdictions in the EU is discussed in more detail in the following article.

In-game currencies

In-game currencies and purchases is another area examined under the Commission’s “digital fairness” fitness check. The recent public consultation sought stakeholders’ views on potential transparency rules when buying virtual items with intermediate virtual currency, such as in-game currency in video games. The Dutch ACM as well as consumer organizations in their recommendations went beyond the transparency requirements, suggesting that a fitness check should evaluate whether there are any consumer benefits at all to in-game and in-app currencies and whether they should be prohibited. As an alternative, they propose an obligation to always state the price in “real” money next to the amounts denominated in virtual currencies. Other options include ensuring that consumers have the same or similar rights when in-game and in-app purchases are made with in-game or in-app currencies as for in-game or in-app purchases with real money, as well as adding contractual terms that stipulate that in-game and in-app currencies are non-refundable as an unfair contract term to the Unfair Contract Terms Directive.

Dark patterns

“Dark patterns” is a concept that is generally used to refer to practices in digital interfaces, including games designs, that steer, deceive, coerce, or manipulate consumers into making choices that often are not in their best interests. The Unfair Commercial Practices Directive⁸  and the corresponding guidance thereon prohibits certain dark patterns, however stakeholders have been raising concerns about its insufficient enforcement. In addition, the recently adopted Digital Services Act⁹  contains a prohibition on dark patterns in its Article 25 (1). However, this provision is weakened by the exclusion of practices covered by the Unfair Commercial Practices Directive and the General Data Protection Regulation.

As part of the ongoing “digital fairness” fitness check the Commission is assessing whether further rules on dark patterns are needed. The options considered the range from a horizontal ban on dark patterns in the Unfair Commercial Practices Directive, an explicit prohibition of the most commonly used dark patterns in Annex I to the Directive, to prescribing specific design solutions to regulate certain practices and a legal duty of care for digital traders to build digital environments that are inherently fair to consumers.

The effects of dark patterns in increasingly immersive digital eco-systems such as games and metaverse deserve a particular attention, according to some stakeholders. The Dutch ACM called for these effects to be specifically addressed in the upcoming EU legislation given that opportunities to influence or mislead consumers will exponentially increase in these immersive environments where the level of influence could be incomparable to anything we have known thus far.

Cancellation and renewals of digital subscriptions

The European Parliament stressed in its recent report that cancelling online video game subscriptions has to be as easy as subscribing to them and said that auto-renewals could be problematic if they continued indefinitely against the consumer’s intentions. The Commission is considering introducing an obligation to provide a prominent cancellation button that would allow consumers to cancel subscriptions more easily. A similar obligation has already been proposed by co-legislators in the context of the ongoing negotiations on the revision of the Distance Marketing of Financial Services Directive¹⁰, which would amend the Consumer Rights Directive and extend the cancellation button to all distance contracts.

Age-appropriate design and age verification

The Commission’s recent European Strategy for a better internet for kids (BIK+) announced a number of initiatives addressing, among others, video games, including the upcoming Code of Conduct for age appropriate design. The Code, which is due by 2024, will likely include commitments in relation to age verification, age appropriate information and risk assessment of design and development choices. The intention for the Code is to be voluntary, although some stakeholders, including the Dutch Secretary of State for Interior, called for the Code to be mandatory.¹¹

Video games platforms that host user-generated content will be in the scope of the Digital Services Act, which updates content moderation rules in Europe in order to better tackle illegal online content. Very Large Online Platforms within the meaning of the Act will be obliged to assess their own risk, including in relation to the protection of minors, and put in place appropriate mitigation measures. The upcoming Code of Conduct could potentially provide for similar rules for the many online games that are not considered an online platform within the meaning of the Digital Services Act.

Child Sexual Abuse detection and removal

The proposal for a Regulation on Child Sexual Abuse, published by the Commission in May 2022 and currently scrutinized by the co-legislators, includes a sliding scale of obligations depending on the type of information/communication service concerned. In-game communication/chat services are covered as long as they include a limited number of persons. They will have obligations related to the assessment of the risk of use of the service for the purpose of online child sexual abuse, and to implementing measures to mitigate this risk. The obligations may also include the execution of orders to detect known or new Child Sexual Abuse Material or grooming.

Author of the article: Kasia Colombani, Partner, Dentons Global Advisors

More insights together with some numbers and statistics in our Video games industry report

1. European Parliament resolution of January 18, 2023 on consumer protection in online video games: a European single market approach.
2. Digital fairness – fitness check on EU consumer law.
3. Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL laying down rules to prevent and combat child sexual abuse.
4. EU Code of Conduct on age-appropriate design.
5. Commission Notice – Guidance on the interpretation and application of Directive 2005/29/EC of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the internal market.
6. The Netherlands Authority for Consumers and Markets’ reaction on EU fitness check on digital fairness.
7. TOWARDS EUROPEAN DIGITAL FAIRNESS BEUC framing response paper for the REFIT consultation.
8. Directive 2005/29/EC of the European Parliament and of the Council of May 11, 2005 concerning unfair business-to-consumer commercial practices in the internal market.
9. Regulation (EU) 2022/2065 of the European Parliament and of the Council of October 19, 2022 on a Single Market For Digital Services and amending Directive 2000/31/EC (Digital Services Act).
10. Council’s general approach on the revision of the Distance Marketing of Financial Services Directive.
11. A.C. van Huffelen, State Secretary for the Interior and Kingdom Relations - Response to the report "Behavioral design in video games" by the Trimbos Institute.