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The news that the European Parliament has voted overwhelmingly to adopt a report by MEP Adriana Maldonado López calling for tighter regulation of video games and their business models does not exactly make for relaxing headlines for the games industry.
Many people in the industry have a knee-jerk reaction to the prospect of any kind of regulatory oversight, and for good reason.
For many years, calls for regulation tended to be based on ill-founded moral panics over violent games, and almost always involved demands that video game content should be neutered in a way that does not apply to other mediums like television or film.
The industry and its consumers resisted those calls fiercely, and generally won the argument whenever it arose – and along the way, many of us picked up a deep suspicion of any kind of governmental oversight, founded on a belief that governments, bureaucrats, and politicians simply do not understand what video games are or who they are for.
Regulation is on the way for some of the more Wild West corners of the industry; but this time around, it's hard to argue that it comes from a place of ignorance, and it may actually end up being a good thing
Consequently, the vote in favour of Maldonado López’ report has put the cat among the pigeons, and you can already sense a little girding of the loins for another battle in the responses, both public and private, from around the industry. This, however, isn’t a moral panic situation, and it’s worth stepping back and looking at both the substance of the report, and the political context surrounding its adoption.
Regulation is almost certainly on the way for some of the more Wild West corners of the industry; but this time around, it's hard to argue that it comes from a place of ignorance, and it may actually end up being a good thing for the industry more widely.
Firstly, I think it’s important to contextualise just what this means in terms of European politics and regulatory processes. It’s common for some people to dismiss the European Parliament as a meaningless talking shop, and its votes as being a load of hot air, and that’s certainly been the response to this vote in some quarters. On the other extreme, many people don’t realise that the EP has no real executive power, and assume that this is a major step towards the adoption of strict new regulations. Neither of those things is entirely true. The EP vote is important and does signal the intent of the bloc’s regulators, but it does not indicate that the EU is about to come down on the games industry like a ton of bricks overnight.
That’s not to say that the ton of bricks option isn’t open; it just won’t happen overnight, and it’s not a fait accompli either way. The EU’s regulatory approaches to consumer protection are often very strict, and can step into the realms of ordering companies to do things that regulators in other territories wouldn’t really consider any of their business.
When thinking about the extent to which the EU could demand and enforce regulations regarding games industry business practices, it’s worth bearing in mind that next year’s iPhone models are likely to switch to USB-C because the EU decided to demand a common charging port standard – a technical detail that most regulators, who focus on issues around competition or monopoly behaviours, wouldn’t really consider to be within their purview at all.
EU’s consumer protection laws are often held up as a pretty uncontroversial benefit of membership by its advocates
The EU is more than willing to force companies to change significant aspects about their product and service offerings if it thinks doing so is in the interest of consumers; that’s anathema to some free market minded people, especially because there are certainly cases where the EU hasn’t got the balance right in these decisions, but it’s important to recognise that it’s generally a popular stance with the European public.
Even the most EU-averse citizens would grudgingly accept that doing things like regulating mobile phone roaming charges out of existence has been an enormous boon to consumers across the union, and the EU’s consumer protection laws are often held up as a pretty uncontroversial benefit of membership by its advocates.
If the EU does decide that your industry is in its sights, then, there’s a pretty good chance it will pass regulation that is far more demanding and interfering than you might expect from regulators elsewhere. This is not least because the EU knows it has the muscle to enforce this.
Other national regulators may wish to take a hard line on certain business practices, but almost no other regulator on earth has the ability to effectively set global standards due to the size and influence of the market it oversees. Indeed, companies in many industries have grumbled in recent years about Brussels being the world’s de facto regulator. They cannot carve out exceptions for the EU as a whole, or simply ignore a market on this scale, and Brussels’ rules are often adopted by regulators in other territories as well.
So, are video games in the EU’s sights right now? Almost certainly. The adoption of Maldonado López’ report by the European Parliament was a pretty ringing endorsement, with 577 votes in favour to 56 against, suggesting that there’s a decent amount of support on the ground for the idea of regulating games.
However, that vote is an endorsement only; it simply means that the EP, which is the EU’s directly elected body, has decided to recommend the report to the European Commission, which is the EU’s executive branch and is made up of representatives appointed by the national governments of the various EU nations. That’s where the actual work of governance and regulation is done, and it’s where consensus-building between national governments and their various interests has to be accomplished before any suggestions recommended by the European Parliament can make progress in the long process towards becoming law.
The industry should focus on the big advantage it’s got right now – time. Europe doesn’t move fast
This means that the suggestions in the report aren’t really a framework document for a new set of regulations – they’re just a list of the things that should be on the table when regulation of this industry is being discussed by a different EU branch. That discussion itself is inevitable. There’s not a lot of credibility to the protests by European industry bodies that the problem is a lack of enforcement of existing rules, not a need for new rules, which is clearly an argument intended to suggest that there’s no need for this debate to take place at all.
The reality that is quietly acknowledged even by those within the industry is that even in situations where enforcement is the problem (gambling by underage children is already illegal, for example), creating effective mechanisms for that enforcement (i.e., something more meaningful than buttons that say “click here to confirm you’re an adult”) would require new regulatory frameworks.
In more straightforward political terms, the concerns about this stuff are very real and go way beyond a few click-hungry journalists still chasing the decades old “bash video games when there’s nothing else to write about” strategy. A sense that some of the sharper practices in the free-to-play space are going beyond the pale in terms of targeting vulnerable people is becoming widespread in the general public, and this time it’s not down to ignorance about games.
Indeed, some of the most serious concerns I’ve heard about the functioning of modern industry business models have actually come from senior people within the industry speaking privately. That 577-56 vote in the EP is a big deal in this regard not because it gives any legal weight to the proposal, but because it suggests a strong consensus across Europe on the need for regulatory action. MEPs are the EU’s directly elected politicians and arguably its most effective barometer of public opinion across the continent.
What is now incredibly important is for the industry to figure out an effective strategy for its approach to engaging with the process that this is about to kick off within the European Commission – ideally one which goes beyond a knee-jerk rejection of regulation, which the EU has traditionally taken a very dim view of.
I don’t think there’s a legitimate sense that the EU is in some way anti-video games, and taking that kind of PR approach is likely to backfire – not least since Europe also has a process ongoing at the moment to figure out how best to improve investment in the games sector and boost Europe’s competitiveness as a centre for game development.
While the EP vote [isn't] the explosive announcement that parts of the industry have feared, it is an early portent of that explosion happening down the line
Framing regulation of some quite specific and honestly pretty controversial business practices as being the work of “anti-video game politicians” isn’t going to work very well, not least since some of the loudest detractors of those practices are actually within the core gaming audience itself.
The industry should focus on the big advantage it’s got right now – time. Europe doesn’t move fast. The Commission will likely take years to act on these proposals, and that’s time in which the industry could essentially neuter any heavy-handed regulation by acting to self-regulate and take care of the worst aspects of the problems by itself.
There are a bunch of common-sense proposals in the report which the industry should actually welcome, related to standardisation of ratings and information, or improvement of child protection systems. As for the aspects related to monetisation, the single best response for the industry would be to spend the next few years showing that it’s a responsible and careful sector that’s capable of self-regulation when there are legitimate public concerns about sharp practice.
The strict rules on loot boxes adopted by some smaller EU countries in recent years are likely a preview of how the Commission will eventually decide on these issues, not least since the countries in question are very much in the heart of Europe. Those rules were essentially ignored by publishers who just carved out exceptions in their products for those territories – but the EU bloc is a market that’s simply too big, too rich, and too influential for companies to take that approach, even before considering the likely influence EU regulation will have on regulatory processes in other regions.
In that sense, while the EP vote is far from being the explosive announcement that some parts of the industry have feared was coming, it is an early portent of that explosion happening down the line. The only good response is getting the industry’s house in order. If Apple, the world’s most valuable company, couldn’t hold back the EU’s regulations on a core part of its product design, don’t hold out much hope for vastly smaller games companies winning a political argument on their loot boxes.