The Laws Behind ‘Fortnite’s’ PS4, Nintendo Switch Woes

When Epic and Nintendo dropped Fortnite on the day of Nintendo’s E3 showcase, fulfilling the expectations of many and finally delivering unto the Nintendo Switch the world’s most popular game, a significant number of players were met with a second surprise. They encountered an unexpected roadblock when trying to load the in-game purchases they had made on another platform: “This Fortnite account is associated with a platform which does not allow it to operate on Switch.” That platform was the PS4, and had that player loaded their account for even one second previously on a PS4, whatever purchases they made on that account and whatever progress they had achieved were now locked to that console, with no recourse. PS4 players cannot transfer their account to another video game console, nor completely disassociate their account with the PS4. They were, and still are, stuck. One might ask if this kind of restriction is legal, considering the vast and possibly embarrassing amount of money some might have spent on the game. The answer to that is there is no answer. Our current laws simply fail to acknowledge the problem. In fact, our legal system exacerbates it by placing the rule-making in the hands of the profiteers.

Aaron Perzanowski, Professor of Law at the Case Western Reserve University School of Law and Co-Author of “The End of Ownership: Personal Property in the Digital Economy,” explains that “In terms of the law, the existing legal rules tend to think about these issues primarily through the lens of End User License Agreements and Terms of Use. Those documents almost universally say that consumers are not purchasing but are merely licensing content. And often, they expressly forbid transferring those digital assets to another party, account, or service.” Such user agreements, Perzanowski recognizes just as many do, are “almost always one-sided documents that strip consumers of rights and insulate their drafters from responsibility. They are rarely read or understood by the consumer, and for good reason. They are incredibly long and complicated, and without the ability to negotiate industry-wide terms, consumers have no incentive to read them. In fact, it would be economically irrational to do so.”

Let’s read one anyway.

The Fortnite End User License Agreement (EULA) states that “regardless of any references Epic may make outside this Agreement to purchasing or selling Game Currency or Content, both Game Currency and Content are licensed, not sold, to you under the License,” which means that not only has Epic never actually transferred ownership of anything to players of Fortnite, but Epic can freely imply that such an action is happening in their marketplace even when it’s not.

What this earns Epic is exactly what eager Nintendo Switch players encountered on the game’s launch day and is, again, written right into that long, burdensome document that you can’t do anything about. The EULA reads, “Except as otherwise prohibited by applicable law, Epic, in its sole discretion, has the absolute right to manage, modify, substitute, replace, suspend, cancel or eliminate Game Currency or Content, including your ability to access or use Game Currency or Content, without notice or liability to you. You may not transfer…Game Currency or Content except within the Software and as expressly permitted by Epic.”

As it turns out, despite how it might look or even how it’s implied by Epic itself, those in-game items are no more than tickets to rides in an amusement park, and you can be kicked out of the park at any moment. Despite this outsized power, though, Epic has uniquely enabled and promoted the cross-platform transfer of user accounts across almost every platform, save that which happens to have the highest user-base of all the modern consoles, the PS4.  It appears Epic would prefer to sell a ticket that can be used at any park, but Sony would rather kick someone out entirely and rip up their tickets rather than let the replica park across the street do any business at all.

It turns out that the supposed “sole discretion” ascribed to Epic in the EULA, has somehow given way to another party, Sony, arguably one of the few entities in the game industry today with more power and more leverage than the makers of “Fortnite.”

Perzanowski agrees, saying that “in this case, it looks like Sony is the one standing in the way of portability. Assuming Epic is opposed to that move, its ability to stand up for consumers turns largely on the nature of its contractual relationship with Sony. If Sony insists on this sort of authority, which wouldn’t surprise me, Epic could try to pressure Sony publicly or privately, but it may not have much in the way of legal recourse against Sony.”

Sony’s only statement on the matter thus far, delivered to the BBC, is a thinly-veiled boast and something only a market-leader would feel it could get away with:

“With… more than 80 million monthly active users on PlayStation Network, we’ve built a huge community of gamers who can play together on ‘Fortnite’ and all online titles.”

“We also offer ‘Fortnite’ cross-play support with PC, Mac, iOS, and Android devices, expanding the opportunity for Fortnite fans on PS4 to play with even more gamers on other platforms,” adding, “we have nothing further to add beyond this at this point.”

Sony is making a bet on their 80 million active users who have invested so much in not only their PS4-based Fortnite accounts, but their Playstation Network Accounts that comprise years of digital purchases which also can only be played on a Playstation 4. That’s leverage, and Sony is using it against not just its now-dependent user-base, but also Epic itself, which benefits enormously from every platform “Fortnite” inhabits. Microsoft’s Xbox One has underperformed, and Nintendo’s Switch is still on the rise, so both of those companies seek to benefit from the goodwill and user migration that comes with opening their digital doorways across previously uncrossed boundaries. Microsoft and Nintendo have similarly allowed cross-platform communication in games like “Rocket League” and “Minecraft,” with Sony the hold out there as well. Because nobody actually owns anything, in “Fortnite” and beyond, Sony is equipped with a broad and encapsulating legal toolset to trap people in a place where they may no longer want to be.

The short of it is that everything here is perfectly legal, but only because there are no significant laws to say one way or the other. This of course raises the question, as the digital age storms on at a speed undetectable by domestic and international legislatures, of what could actually be done?

“There are two basic approaches to solving this problem. One is to recognize that personal property rights can and should extend to digital goods like in-game purchases,” Perzanowski says, clarifying that there are cases pending in both the US and EU tackling this question now. Were the courts to recognize digital goods as personal property in the legal parlance, items like those in ‘Fortnite’ could theoretically be resold by the player, and you might see secondary Fortnite marketplaces arise like collectible card shops. Not only would this cut into the profit seen by Epic and eliminate issues of cross-platform transfer, but the fabricated allure of rarities and limited sales periods employed in Epic’s digital store would succumb to a more natural ebb and flow of a consumer-led marketplace. Epic’s digital store is particularly egregious in the way it rotates out high-demand products and marks them as “Rare” or “Epic” as a means of creating sense of buyer urgency. The existence of a secondary market would erase or at least severely curtail this sort of manipulation, which in itself is enough to motivate virtually every seller of digital goods to sell licenses to digital goods instead. There is no object to lose, only the idea of one.

Perzanowski’s second approach, “would be a consumer protection approach that more directly obligates companies to enable or facilitate cross-platform use of digital goods.” In this particular case, Perzanowski imagines that “publishers are free to make their titles available on the platform or platforms of their choosing.

“If Nintendo doesn’t want to make ‘Mario Kart’ available on the PS4, that’s their call. But to the extent the same title is sold on multiple platforms, consumers who buy that title should be free to import characters or in-game purchases onto whatever platform they choose. The difference here is that Sony is acting not as a publisher of the game but as the platform maker to impose these restrictions. That strikes me as a very different and much more troubling practice.”

What’s left is public pressure, which has led to change in the gaming industry in the past. When Microsoft first announced the Xbox One, the company wanted its third-generation gaming console to require an internet connection for its use, and they tried to sell such a restriction as a feature. It would have provided the opportunity to share digital games across family plans, but not without the caveat that a game’s license, even that of a physical copy, be tied to an online account to begin with, and thus restrict the transfer of physical games. Ironically, the industry is still moving in this direction despite the backlash and eventual 180 Microsoft would make to appease the outcry of gamers. Microsoft’s console has suffered ever since, but Sony’s, having simply moved in this direction as silently as possible up until now, managed to affect a market dominance that the company hopes will insulate it from any sort of sales degradation.

Beyond games, Perzanowski says “there are some signs that courts are starting to recognize importance of ownership rights. Last year the Supreme Court rejected the notion of post-sale restrictions on patented goods in a case involving Lexmark printer cartridges.”

And K-Cup maker Keurig, having rigged its Keurig 2.0 product to only read licensed K-cups and reject the use of third-party cups, has been subjected to multiple anti-trust lawsuits alleging a monopolization of its power through anti-competitive practices. Similarly to Sony here, Keurig is using a technological barrier, rather than one of innovation, to bar competitors from making a run at its customers.

“But those were physical goods. Our legal system still doesn’t have a well-developed notion of personal property rights for digital goods like in-game purchases.”

And if all of this seems like a minor tragedy, and a digital good shouldn’t be subjected to the same scrutiny as something so tangible as a cup of coffee, consider that “Fortnite” made nearly $300 million in revenue in April, all through the sale of licenses for in-game items. But more to the point, if a zany character model in a video game is what gets you up in the morning, then really what’s the difference?

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