FTC investigates YouTube network Machinima for solicited Xbox One videos

Earlier this week, several reports pointed out that Microsoft employed “deceptive marketing” when promoting the Xbox One through the YouTube network Machinima. The Federal Trade Commission, or FTC, announced on Wednesday that Machinima has agreed to settle the issue regarding its positive commentaries about the Xbox One, which can be seen in videos that they uploaded on their channel back in 2013, after the launch of the Xbox One.

The videos were allegedly solicited and paid for, which means that each video was written under the influence of monetary benefit. It would not have been an issue if Machinima’s YouTubers disclosed that the videos were paid for.

Although both Microsoft and Machinima are involved in the legal issue, the former has been absolved. The FTC explained in a statement quoted by Gamespot:

"While Microsoft and Starcom both were responsible for the influencers' failure to disclose their material connection to the companies, [FTC Commission] staff considered the fact that these appeared to be isolated incidents that occurred in spite of, and not in the absence of, policies and procedures designed to prevent such lapses," the FTC said. "The companies also quickly required Machinima to remedy the situation after they learned that Machinima was paying influencers without making the necessary disclosures."

The update by Gamespot also states that Microsoft has released a statement regarding the investigation by FTC. "We are pleased that the FTC recognized [that] Microsoft has vigorous compliance processes and procedures for sponsored campaigns," a representative said.

Machinima, on the other hand, released a statement to WIRED, claiming that the controversial incident happened before a “change of management in March 2014.”

“Machinima is actively and deeply committed to ensuring transparency with all of its social influencer campaigns,” Machinima said in the statement.

The FTC notes that Machinima paid YouTubers to upload videos that spoke positively about the Xbox One and some of its exclusive games. The videos could have an impact on the console wars as many buyers tend to watch or read a review first before purchasing a product.

A bigger problem with such method of advertising is people may not get the product that they were expecting, thereby stripping them of money for a console they may not actually want. If the YouTubers disclosed that they were being paid for for such reviews, then it would be of no issue to any party. A pair of YouTubers were allegedly paid $45,000 (AU $64, 327) for the commentary about the Xbox One.

According to WIRED, Machinima was not fined for the 2013 incident, but it could be fined for up to $16,000 (AU $22, 974) if they commit such act again in the future.

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