European gaming firms say new EU consumer rules will ‘cripple’ the industry

BRUSSELS — Top global gaming companies have blasted new EU consumer regulations they say would “cripple the competitiveness of Europe’s world-leading video games industry.”

The European Commission unveiled a new set of rules Wednesday on consumer protection, including the Digital Fairness Act, that is part of the first-ever sector-specific limits on the video-game industry, alongside the EU’s mid-September regulation to protect children online.

Under the proposed DFA, which still has to be negotiated with other EU institutions, video games would no longer be able to earn money by offering minors micro-transactions to advance in the game, known as pay-to-win or pay-to-progress. There are also restrictions on “loot boxes,” which contain surprise virtual items that players can buy with real money. The law also stipulates that in-app virtual currencies must be turned off by default for under-18s.

The Commission says these practices encourage overspending, which is especially dangerous for vulnerable consumers like kids. Violating the rules can lead to fines of up to 6% of global revenue in cases that affect more than two-thirds of the EU population.

“We want the European gaming industry to continue to thrive,” said Michael McGrath, the commissioner for consumer protection, announcing the measures. But competition, McGrath added, should be based “on creativity, innovation, and quality, and not on practices that exploit consumers.”

In a joint statement, the European Game Developer Federation, an association representing EU firms, and Video Games Europe, which includes global juggernauts like Sony and Epic Games, say that the proposed definition of pay-to-win is “fundamentally flawed, lacks clear definitions and would create huge confusion for players and developers alike” since it could cover “any purchase.”

Angry Birds & friends

While Europe has struggled to keep up with the U.S. and China in several tech sectors as AI and social media, the bloc is home to developers of some of the world’s most popular games such as Angry Birds and The Witcher. Video game spending in the bloc topped €27 billion, accounting for 17% of the global market, last year, according to the European Audiovisual Observatory.

The gaming groups argue that the industry already does a good job regulating itself with parental controls and the content rating system PEGI, which the DFA doesn’t take into account.

“Effectively, the DFA moves all decisions from parents and children to the Commission,” they wrote.

The DFA aims to regulate a slew of other industries, cracking down on manipulative practices in online commerce such as addictive design, dynamic pricing and making it difficult to unsubscribe from a digital subscription.