Note:This article has been updated with remarks from HoYoverse Singapore.
Earlier this weekend, HoYoverse, specifically its Singapore-based outfit Cognosphere Pte.Ltd. and its US-based subsidiary Cognosphere LLC, were charged by the United States' Federal Trade Commission (FTC) for alleged consumer protection violations pertaining to Genshin Impact's marketing and its wish-based gacha system.
This stems from a complaint filed by the US Department of Justice. They allege that HoYoverse, among other things:
- Actively collects and sharesinformation from those under 13 (through its HoYoLAB social network and tracking player progress and purchases through User IDs),
- That itdoes so without consent and notification of the parent, whichviolates the FTC's Children's Online Privacy Protection (COPPA) Rule,
- Misrepresents the oddsof winning a 5-star under its wish system (defined as a "loot box" in the complaint), and misleads the user in the potential monetary cost needed to obtain them,
- Unfairly promotes these 5-star rewards to children and teenagers.
(Note that while HoYoverse was named in the complaint, Cognospherewas explicitly labeled the defendant.)
The complaint contains evidence of what it purports to be Genshin'schildren-centred marketing, including the usage of characters that "have the appearance of young children" as mascots, and seeking out influencers known for making content in games popular with children, especially Minecraft and Roblox, to market the game(which the complaint claims to have verified with internal HoYoverse documents).
The complaint also alleges that Genshin Impact's current system of exchanging in-game and real life currency, particularly the use of Genesis Crystals, Primogems and Fates, obfuscates the true monetary cost of wishing on a banner due to the series of real and virtual currency conversions needed and the "mismatched and unintuitive denominations" used.
It also took issue with how the odds of winning a 5-star is conveyed in the game, particularly how rates for these rare characters and items are hidden under sub-menus and do not disclose actual drop rates.
HoYoverse response, and what does this mean?
For a start, the FTC laid out a series of changes to be made to Genshin Impact under a proposed order:
- Prohibited from allowing children under 16 to purchase loot boxes in their video games without a parent's affirmative express consent;
- Prohibited from selling loot boxes using virtual currency without providing an option for consumers to purchase them directly with real money;
- Prohibited from misrepresenting loot box odds, prices and features;
- Required to disclose loot box odds and exchange rates for multi-tiered virtual currency;
- Required to delete any personal information previously collected from children under 13 unless they obtain parental consent to retain such data; and
- Required to comply with COPPPA including its notice and consent requirements.
This is in addition to aUS$20 million (S$27 million) fine to the FTCto settle the charges. The proposed order would need approval by a US federal judge to be passed, but on its part, HoYoverse, through Cognosphere, put out a statement conceding to the proposed changes:
While we believe many of the FTC's allegations are inaccurate, we agreed to this settlement because we value the trust of our community and share a commitment to transparency for our players... we will introduce new age-gate and parental consent protections for children and young teens and increase our in-game disclosures around virtual currency and rewards for players in the U.S.
However, it also pushed back against some of the FTC's claims, stating that "Genshin Impact is a popular free-to-play, anime-style game designed for older teens and adults" and noted that animation-style content in general hasbeen well-received across various ages.
The "in the U.S." part of the statement also raises some questions as to whether we'll see these new disclosures outside the United States. HoYoverse Singapore commented that they're focusing on launching these new disclosures for the American market (see below), but we'll have to see if there's any changes to its gacha marketing globally.
All in all, the proposed order doesn't outright dismantle Genshin's existing wish system, though it will likely see more disclosures, protections, and potentially a change in the way Fates are purchased.It remains to be seen if the exact changes made to Genshin will be sweeping, or relegated to more minor pop-ups or persistent elements on the banner and store pages.
The document detailing the proposed order could give us some clues, as the disclosures would have to be "Clear and Conspicuous", that "Affirmative Express Consent" must be gained from the parent of a child or early teen, and that HoYoverse must disclose the likelihood of obtaining a rare in-game item and the "range of potential total costs", all of which has to be done in easily understandable language. It also stated that the changes have to be made within 6 months of when the proposed order is enacted.
We reached out to HoYoverse Singapore for comment on this matter. While they reiterated the points laid out by Cognosphere above, they also noted that the new age-gate and disclosure measures "will primarily launch in the United States". They commented that those outside the United States should stay tuned for potential further updates from HoYoverse.
Source: FTC