Genshin Impact Developer Fined $20 Million for Deceptive Practices Targeting Children
The popular gacha game Genshin Impact, developed by HoYoverse, has found itself in the crosshairs of the Federal Trade Commission (FTC) over its monetization practices. The FTC alleges that HoYoverse engaged in deceptive tactics, particularly targeting children, by obfuscating the true costs and odds associated with in-game purchases. The company has agreed to a $20 million settlement, but many critics argue that this penalty is a mere slap on the wrist given the game’s massive revenue stream.
The core of the FTC’s complaint revolves around Genshin Impact’s use of "dark patterns," manipulative design choices intended to encourage spending. The FTC claims HoYoverse deliberately misled players, including children and teens, about the amount of money required to obtain rare in-game items. This deceptive design, the FTC argues, pressured players into spending significantly more than they initially intended. The complaint also highlights HoYoverse’s alleged marketing to children and collection of their data, a violation of the Children’s Online Privacy Protection Act (COPPA).
As part of the settlement, HoYoverse must implement several changes to its practices. These include preventing children under 16 from making in-app purchases without parental consent, deleting personal information collected from children under 13 without parental permission, and clearly displaying the real-world monetary value of in-game currency bundles used for loot box purchases. Additionally, the company must accurately disclose the odds of obtaining items from loot boxes and provide transparent information about its multi-tiered currency system.
While these changes represent a step towards greater transparency and consumer protection, the size of the fine relative to Genshin Impact’s revenue has drawn criticism. The game has generated billions of dollars since its launch, with even its "least profitable" year bringing in $710 million. The $20 million penalty, therefore, represents a relatively small fraction of the company’s earnings, leading some to question whether it will serve as a sufficient deterrent against future exploitative practices.
Furthermore, the settlement only applies to the United States, leaving players in other regions, particularly Asia where gacha games are immensely popular, without the same protections. This raises concerns about the overall effectiveness of the FTC’s action in addressing the broader issue of deceptive monetization practices in the gaming industry.
HoYoverse, in its official statement, claims that many of the FTC’s allegations are inaccurate but agreed to the settlement to maintain the trust of its community and demonstrate a commitment to transparency. They state that they will implement new age-gate and parental consent protections for younger players and improve in-game disclosures regarding virtual currency and rewards for US players. However, the lack of a class-action settlement means that none of the $20 million fine will be returned to players who may have been affected by the alleged deceptive practices. The settlement serves primarily as a regulatory penalty rather than direct compensation for players.
The case against HoYoverse highlights the ongoing debate surrounding the ethical implications of gacha mechanics, particularly in games with large underage player bases. While the FTC’s actions represent a move towards greater accountability in the gaming industry, the limited scope and relatively small financial penalty raise questions about its long-term impact. The case serves as a warning to other game developers employing similar tactics, but the true test will be whether it leads to meaningful and lasting changes in the way gacha games are designed and monetized. Critics argue that more substantial penalties and broader international cooperation are needed to effectively address the potential for exploitation inherent in these popular game mechanics.
