A Federal Trade Commission investigation into publicity-for-pay allegations has revealed that one YouTube channel pocket nearly £20,000 for promoting the Xbox One console. The investigation by the FTC was launched on the back of revelations, back in January last year, that popular YouTube network Machinima was offering its partners bonus payments for in exchange for Xbox One plugs. It soon became apparent that the practice was commonplace, with game publishers secretly paying for YouTube advertising.
The FTC investigation has discovered that YouTube channel Syndicate took $30,000 (£19,639) for two videos promoting Xbox One, while SkyVsGaming was paid $15,000. Both channels agreed to mention Xbox One, without saying anything negative, and were contractually obliged to keep its agreement secret.
Microsoft has blamed Starcom, the advertising agency it hired to publicise its current-gen console, for the shady agreement, claiming that it had no knowledge of the practice. Such paid advertising is illegal in the UK, but is considered more of a grey area in the US. Nevertheless, the FTC has described such secret paid advertising as “false and misleading”.
“In numerous instances, [Machinima] has failed to disclose, or disclose adequately, that the individuals who posted the reviews were compensated in connection with their endorsements,” the FTC report reads. “This fact would be material to consumers in their purchasing decisions regarding Xbox One and the launch titles. The failure to disclose this fact, in light of the representations made, was, and is, a deceptive practice.”
Since its legality is fuzzy, the FTC has done little more than warn Starcom and Machinima to end its financial relationship and cease any other current or future paid advertising.