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The US Federal Trade Commission (FTC) has settled with Machinima Inc. after it paid YouTube broadcasters to endorse Microsoft's Xbox One without disclosure:
The FTC said the settlement [PDF] will forbid Machinima from running videos without properly disclosing when the broadcaster has been compensated for endorsing a product. "When people see a product touted online, they have a right to know whether they're looking at an authentic opinion or a paid marketing pitch," said FTC consumer protection bureau head Jessica Rich. "That's true whether the endorsement appears in a video or any other media."
[...] The videos were aired as part of an advertising campaign for Microsoft and its advertising agency, Starcom Mediavest Group. The FTC determined that neither Microsoft or Starcom would be subject to the complaint, which was instead made against Machinima. "The failures to disclose here appear 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 [PDF]. "Microsoft had a robust compliance program in place when the Xbox One campaign was launched, including specific legal and marketing guidelines concerning the FTC's Endorsement Guides."
Under the terms of the settlement, Machinima will be required for the next 30 years to clearly disclose when a video includes paid endorsements. The company will also be required to set up policies to ensure proper labeling and disclosure of paid endorsements and, for the next five years, maintain all documents related to the settlement available to the FTC.
Related: UK Vloggers "Must" Comply With Advertising Guidelines
(Score: 2) by Grishnakh on Saturday September 05 2015, @01:11AM
No, not good at all. This is terrible news.
The problem here is that this was a classic underhanded MS move: instead of doing something evil directly, get some other company to do it for you. They did it in the SCO case (paying Baystar to help continue the case), and they've obviously done it here. Why would this "Machinima" company shill for the Xbox One? Because they got paid to, of course; they certainly don't have any other motivation. So now they get in trouble, but that insulates MS from the legal fallout, as Machinima gets hit with the slap on the wrist whereas MS could have been hit much worse.