[Federal Register Volume 81, Number 136 (Friday, July 15, 2016)]
[Notices]
[Pages 46078-46080]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16729]


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FEDERAL TRADE COMMISSION

[File No. 152 3034]


Warner Bros. Home Entertainment Inc.; Analysis of Proposed 
Consent Order to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices. The attached Analysis to Aid Public Comment describes both 
the allegations in the draft complaint and the terms of the consent 
order--embodied in the consent agreement--that would settle these 
allegations.

DATES: Comments must be received on or before August 10, 2016.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/warnerbrothersconsent online or on 
paper, by following the instructions in the Request for Comment part of 
the SUPPLEMENTARY INFORMATION section below. Write ``In the Matter of 
Warner Bros. Home Entertainment Inc., File No. 152 3034--Consent 
Agreement'' on your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/warnerbrothersconsent by following

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the instructions on the web-based form. If you prefer to file your 
comment on paper, write ``In the Matter of Warner Bros. Home 
Entertainment Inc., File No. 152 3034--Consent Agreement'' on your 
comment and on the envelope, and mail your comment to the following 
address: Federal Trade Commission, Office of the Secretary, 600 
Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, 
or deliver your comment to the following address: Federal Trade 
Commission, Office of the Secretary, Constitution Center, 400 7th 
Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Linda K. Badger, (415-848-5151), FTC 
Western Region, 901 Market Street, Suite 570, San Francisco, CA 94103.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement, and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
from the FTC Home Page (for July 11, 2016), on the World Wide Web at: 
http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before August 10, 2016. 
Write ``In the Matter of Warner Bros. Home Entertainment Inc., File No. 
152 3034--Consent Agreement'' on your comment. Your comment--including 
your name and your state--will be placed on the public record of this 
proceeding, including, to the extent practicable, on the public 
Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a 
matter of discretion, the Commission tries to remove individuals' home 
contact information from comments before placing them on the Commission 
Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which . . . is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/warnerbrothersconsent by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``In the Matter of Warner 
Bros. Home Entertainment Inc., File No. 152 3034--Consent Agreement'' 
on your comment and on the envelope, and mail your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
600 Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 
20580, or deliver your comment to the following address: Federal Trade 
Commission, Office of the Secretary, Constitution Center, 400 7th 
Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. If 
possible, submit your paper comment to the Commission by courier or 
overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before August 10, 2016. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``FTC'' or ``Commission'') has 
accepted, subject to final approval, an agreement containing consent 
order from Warner Bros. Home Entertainment Inc. (``Warner Bros.'' or 
``respondent''). The proposed consent order (``proposed order'') has 
been placed on the public record for thirty (30) days for receipt of 
comments by interested persons. Comments received during this period 
will become part of the public record. After thirty (30) days, the 
Commission will again review the agreement and the comments received, 
and will decide whether it should withdraw from the agreement and take 
appropriate action or make final the agreement's proposed order.
    This matter involves respondent's use of social media influencers 
to advertise the video game, Middle Earth: Shadow of Mordor (``Shadow 
of Mordor''). According to the Commission's complaint, Warner Bros., 
through its ad agency, Plaid Social Labs, LLC, hired individuals who 
had earned reputations as video game enthusiasts on YouTube (``YouTube 
influencers'') to post positive videos promoting Shadow of Mordor on 
YouTube. The Commission's complaint alleges that these YouTube 
influencers were given free access to a pre-release version of Shadow 
of Mordor and cash payments often ranging from hundreds of dollars to 
tens of thousands of dollars, if the videos they created about Shadow 
of Mordor met certain requirements defined by Warner Bros. Among other 
things, Warner Bros. required influencer videos to promote a positive 
sentiment about the game, and not to disclose any bugs or glitches that 
the game might have. Consequently, these videos were sponsored 
advertisements, and did not necessarily reflect the independent 
experiences of the individual YouTube influencers.
    The complaint also alleges that while Warner Bros. instructed the 
YouTube influencers to provide a disclosure that their videos had been 
sponsored, it specified that the disclosure be written, and placed in 
the description box

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appearing below the YouTube videos. Warner Bros. did not require the 
YouTube influencers to place a sponsorship disclosure clearly and 
conspicuously in the video itself. Nor did Warner Bros. require that 
the YouTube influencers be instructed to place the sponsorship 
disclosure ``above the fold'' in the description box, or visible 
without consumers having to scroll down or click on a link, as it had 
for other promotional information about Shadow of Mordor. (See, e.g., 
Exhibit A-1) As a result, most YouTube influencers did not include any 
sponsorship disclosures in their videos, and only placed their 
sponsorship disclosures ``below the fold'' in the description box below 
the video. Therefore, consumers had to click on a ``Show More'' button 
in the description box and potentially scroll down before they could 
see the sponsorship disclosure. As a result, consumers who watched 
these YouTube videos were unlikely to learn that the videos were paid 
promotions for Warner Bros.
    The Commission's complaint further alleges that when YouTube 
influencers posted their Shadow of Mordor videos for viewing on 
Facebook or Twitter, consumers were even less likely to see these 
sponsorship disclosures because such posts did not include the ``Show 
More'' button. In addition, the complaint states that on at least two 
occasions, the influencers disclosed only that they had been given 
early access to the game, and did not adequately disclose that they had 
also been paid to post the video.
    According to the complaint, in numerous instances, YouTube 
influencers did not disclose or adequately disclose that Warner Bros., 
through Plaid Social, offered compensation to the influencers in 
exchange for creating and uploading gameplay videos as part of a Shadow 
of Mordor advertising campaign. The Commission's complaint alleges that 
these videos were false and misleading because they did not reflect the 
independent opinions or experiences of impartial video game 
enthusiasts. The complaint further alleges that the videos were 
deceptive because they failed to disclose or disclose adequately that 
the influencers who posted the videos were compensated in connection 
with their endorsements.
    The proposed order includes injunctive relief to address these 
alleged violations and requires Warner Bros. to follow certain 
monitoring and compliance procedures related to its use of influencer 
campaigns.
    Part I of the proposed order prohibits Warner Bros., in connection 
with the advertising of any home entertainment product or service, from 
misrepresenting in any influencer campaign that an influencer or 
endorser of such product or service is an independent user or ordinary 
consumer of the product or service.
    Part II of the proposed order requires Warner Bros., in connection 
with the advertising of any home entertainment product or service by 
means of an endorsement, in any influencer campaign, to disclose 
clearly and conspicuously a material connection, if one exists, between 
the influencer or endorser and Warner Bros.
    Part III of the proposed order sets out certain monitoring and 
compliance obligations to ensure that Warner Bros., or any entity it 
engages to conduct an influencer campaign, comply with Parts I and II 
of the proposed order. These obligations include: Obtaining signed 
acknowledgements from such influencers that they will disclose their 
material connection to Warner Bros.; monitoring the influencers' 
representations and disclosures; maintaining records of monitoring 
efforts; and, under certain circumstances, terminating and ceasing 
payment to influencers who misrepresent their independence, or fail to 
properly disclose any material connection to Warner Bros. Part III 
specifically provides that if Warner Bros. engages an entity to conduct 
an influencer campaign, Warner Bros. must take steps to ensure that the 
entity complies with this Part, and to monitor its compliance. If the 
entity fails to comply with this Part, Warner Bros. must cease payment 
to the entity until it cures any noncompliance. Furthermore, Warner 
Bros. is required to disqualify the entity from conducting future 
influencer campaigns upon a repeat incident, unless it reasonably 
concludes that the entity's failure to comply was inadvertent.
    Part IV of the proposed order contains recordkeeping requirements 
for relevant documents.
    Parts V through VII of the proposed order require the company to: 
Provide copies of the order to certain personnel having 
responsibilities with respect to the subject matter of the order; 
notify the Commission of changes in corporate structure that might 
affect compliance obligations under the order; and file compliance 
reports with the Commission.
    Part VIII of the proposed order provides that the order will 
terminate after twenty (20) years, with certain exceptions.
    The purpose of this analysis is to facilitate public comment on the 
proposed order, and it is not intended to constitute an official 
interpretation of the complaint or proposed order, or to modify the 
proposed order's terms in any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-16729 Filed 7-14-16; 8:45 am]
 BILLING CODE 6750-01-P