Back in 2013, Microsoft revealed its Xbox One and fans were not happy to know what MS is planning to do with it. At the time, Xbox One focused on TV, DRM, Mandatory Kinect etc; and all that with a higher price compared to PS4.
Microsoft shot itself on the foot, which gave Sony’s PS4 and edge that it holds to this day. In the midst of the negativity regarding the Xbox One, a new controversy popped its head over at YouTube.
Machinima, an American gaming and media streaming website, and a multi-channel network, was accused to paying YouTubers for saying positive things about Microsoft’s console. YouTubers were not allowed to discuss the agreement, video cuts were suggested to them, and weren’t allowed to say anything negative about the console, Microsoft or launch titles for Xbox One.
At the time, these were allegations but now an investigation report from the Federal Trade Commission, has found Machinima guilty.
This means that paid endorsements were done to give Xbox One a positive image among users. The network paid Youtubers upto $30,000 for these endorsements, according to the report.
The report is a huge hit for Machinima’s credibility, but the network has decided to settle the matter with FTC. Without an order in place, FTC doesn’t have the mandate to seek civil fines.
FTC has suggested that Machinima from now on, asks its influencers to clearly disclose that they have been paid for endorsements.
According to FTC spokesman Jay Mayfield:
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. That’s true whether the endorsement appears in a video or any other media.
Now for the big question, was Microsoft involved? According to the report, there wasn’t any wrongdoings on Microsoft’s part.
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. 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, 16 C.P.R. Part 255, and relevant training made available to employees, vendors and Starcom personnel. Since the Xbox One campaign, Microsoft and Starcom have adopted additional safeguards regarding sponsored endorsements, and they have committed to, among other steps, specifically requiring their employees to monitor influencer campaigns conducted by subcontractors in the future. In addition, Microsoft and Starcom took swift action to require that Machinima insert disclosures into the campaign videos once they learned that Machinima had paid the influencer and that no disclosures had been made.
From the looks of it, Microsoft said yes to Machinima’s campaign, but had no idea that disclosures of paid endorsements have not been made. If that’s true, Machinima is solely responsible of deceptive marketing for the Xbox One.