August 8, 2019

The games industry is currently largely unregulated. Companies operating in this industry have relatively few legal and regulatory requirements to meet but there are clear signs that this is beginning to change.

We have already seen signs of this in Asia. The Youth Protection Revision Act (better know as the Shutdown Law or Cinderella Law) came into effect in South Korea on 20 November 2011 and bans under 16s from playing online video games between midnight and 6am. Additionally, Chinese regulations that came into effect on 1 July 2016 require that all mobile games to be approved by the State Administration of Press, Publication, Radio, Film, and Television before being published.

European developments

2019 has seen a number of developments in Europe that signal that the industry is likely to face an increasingly regulated future. The key European developments have (somewhat surprisingly given the relatively light touch regulatory environment) all happened in the UK. Most have arisen in the UK Parliament, both in the lower House of Commons and the upper House of Lords, which is even more surprising given that so much of the attention of the UK Government (UKG) and parliamentary time has been consumed by Brexit!

In this update we outline some of the key UK regulatory developments. Please follow the links to read our considerations of what the future may hold, and how companies may need to respond.

Immersive and addictive technologies inquiry

The Department for Digital, Culture, Media & Sport (DCMS) is a UK ministerial department that seeks to, “protect and promote [the UK’s] cultural and artistic heritage and help businesses and communities to grow…” The DCMS Committee monitors the policy, administration and expenditure of the DCMS.

On 10 December 2018, the DCMS Committee launched a new inquiry to examine the development of immersive technologies such as VR and AR and the potential impact that these technologies may have in relation to sport, entertainment and news. The press release is here.

The terms of reference for this inquiry are fairly broad. However, the title of the press release states that it is a, “new inquiry looking into the growth of ‘immersive and addictive technologies“. The word ‘addictive’ was felt particularly keenly in the games industry. In 2018, notwithstanding protests from many in this industry, the World Health Organization released its 11th International Classification of Diseases (ICD) which included the condition ‘gaming disorder’: (see here).

In the oral hearings, members of the Committee had some fairly harsh words for the games industry. For example, on the subject of ‘gaming disorder’, the chair of the committee said: “The industry does not seem to agree on any kind of definition of what gaming disorder might be and, if anything, disputes the fact that it might exist, yet people are complaining of it. The only thing you can really assume from that is the industry either thinks this is a niche problem that it does not have to worry itself about or thinks the problem may not exist at all… If we cannot see the industry wishing to engage in this debate in a helpful way, others need to define the problem for it.”

The inquiry is coming to a close and the Committee will then produce a report setting out its findings and making recommendations to the UKG. The UKG must respond to each of the report’s recommendations within two months of publication.

Regulating in a Digital World report

On 9 March 2019, the House of Lords Select Committee on Communications published a report: Regulating in a Digital World. The scope of this report is very wide and looks at the ‘digital world’. The Committee made a number of recommendations and sets out ten “agreed and enforceable…principles” that will, “guide the development of regulation online“. These principles are very broad and a number of them would affect the games industry, such as the principle: “Ethical design: services must act in the interests of users and society“.

The UKG has now responded to this report (see here) largely by reference to the Online Harms White paper (see below). However, the report is somewhat wider than the Online Harms White Paper; it makes this point in the summary section which states: “The need for regulation goes beyond online harms.” The report will therefore remain relevant to inform future discussion and potential legislative changes.

Age Appropriate Design in data protection: a code of practice for online services

On 15 April 2019 the Information Commissioner’s Office (the ICO) (which is the UK’s data protection regulatory authority), opened a public consultation on a draft code of practice for online services likely to be accessed by children: Age Appropriate Design: a code of practice for online services.

The code sets out the kind of design standards that the ICO will expect providers to meet in connection with online services that process personal data. One of the key issues with the draft code is that the services to which it relates are not only those that are, “designed for and aimed specifically at children” but also to any services that are, “likely to be used by under-18s.”

The public consultation on the draft code closed on 31 May 2019 and the ICO is currently in the process of reviewing the feedback that has been submitted. Judging by the public commentary and feedback this will probably involve quite a lot of work. A number of organisations have expressed significant concerns about aspects of the code or indeed the code as a whole. For example, free market think tank the Adam Smith Institute has made its opposition fairly clear: “This is an unelected quango introducing draconian limitations on the internet with the threat of massive fines. This code requires all of us to be treated like children. An internet-wide age verification scheme, as required by the code, would seriously undermine user privacy…There are many potential unintended consequences…This plan would seriously undermine the business model of online news and many other free services… The UKG should take a step back. It is really up to parents to keep their children safe online”.[1]

On 7 August, Elizabeth Denham, the Information Commissioner (and therefore the head of the ICO) published a blog post providing an update on the progress of the code (see here). In this she states that the ICO is, “working hard to produce a code that encourages future creativity and improvement, while protecting the privacy of the tech innovators of tomorrow”. She also reports that the final version of the code will be delivered to the Secretary of State before the statutory deadline of 23 November 2019. We can therefore expect that a final version of the code will be approved by Parliament by the end of this year, although there will then be a transition period before it takes effect. (For a more detailed report and commentary on her blog post see here.)

[1] https://www.adamsmith.org/news/asi-responds-to-icos-age-appropriate-design-code

Online Harms White Paper

On 8 April 2019, the UKG published an Online Harms White Paper outlining its approach towards regulating the internet to tackle online harms: Online Harms White Paper.

The White Paper sets out the UKG’s plans for a package of online safety measures, consisting of a series of legislative and non-legislative online safety measures. The overall approach is to make companies responsible for their users’ safety online, with a particular focus on children and other vulnerable groups.

The key measure is that the UKG will establish a new statutory duty of care on relevant companies. This will require companies to take reasonable steps to prevent their users from coming to harm as a direct consequence of activity on their services and to tackle illegal and harmful activity on their services. The fulfilment of this duty will be overseen and enforced by an independent regulator. Moreover, it raises the possibility that a games company could be liable for negligence or other tortious if a player were to come to harm through playing a game (or playing a game too much).

The UKG invited responses during a consultation period that closed on 1 July 2019. The Online Harms consultation closed on 1 July. At the annual conference of the UK children’s charity, the NSPCC on 26 June,[1] the then Culture Secretary Jeremy Wright said that the UKG intend to respond to the outcome of the consultation before the end of the year and to introduce legislation “as soon as possible next year“.

Both the ICO and the UK regulator for communications services, Ofcom, have expressed some concerns about the potential scope of the new regulatory regime. At the same conference, the Chief Executive of Ofcom, Sharon White, said that the new rules should be, “targeted and balanced”. Others have gone further. The Internet Association, a US lobbying group, published a response to the proposals expressing the view that they could create, “a disincentive for existing businesses to continue to provide their services in the UK”.[2]

[1] https://uk.internetassociation.org/files/ia_ohwp-submission_28-06-2019_uk/

[2] https://learning.nspcc.org.uk/news/2019/june/how-safe-are-our-children-conference-2019/