UNITY NEWS - PRICE CHANGE, BACKLASH...

[DerVVulfman]

EU GAME DEVS ASK REGULATORS
LOOK AT UNITY'S ANTI-COMPETITIVE BUNDLING
Company's power is a "market failure" with "significant vendor lock risk" for devs.

In the wake of Unity's sudden fee structure change announcement last week, a European trade group representing thousands of game developers is calling on governments to "update their regulatory framework" to curb what they see as a "looming market failure" caused by "potentially anti-competitive market behavior."

In an open letter published last week, the European Games Developer Federation goes through a lot of the now-familiar arguments for why Unity's decision to charge up to $0.20 per game install will be bad for the industry. The federation of 23 national game developer trade associations argues that the new fee structure will make it "much harder for [small and midsize developers] to build reliable business plans" by "significantly increas[ing] the game development costs for most game developers relying on [Unity's] services."

The organization also publicly worries about "professional game education institutions" that may need to update their curriculums wholesale if there is a mass exodus from Unity's engine. "Many young industry professionals who have built their career plans on mastering Unity’s tools [will be put] in a very difficult position."

Beyond simply being bad for the industry, though, the EGDF argues that "Unity's move might be anti-competitive" in a way that demands government action. The group takes a special exception to Unity's history of bundling its game engine with services like analytics, in-game chat, ad networks and mediation tools, user acquisition tools, and more. That kind of bundling creates "a significant vendor lock risk for game developers using Unity services," which "also makes it difficult for many game middleware developers to compete against Unity."

This kind of bundling directly supports Unity's new fee structure plans, the EGDF argues, thanks to a clause where the company promises that developers "may be eligible for credits toward the Unity Runtime Fee based on the adoption of Unity services beyond the Editor." This amounts to Unity "strategically using install fees to deepen the lock-in effect by creating a solid financial incentive to bundle other Unity services even closer to its game engine," the EGDF says. This "will create a competitive disadvantage for those game distribution platforms that do not use ad-based monetization at all," and punish games that generate viral attention without much in the way of monetization.

If the EGDF's invocation of the B-word sounds familiar, it might be because similar bundling accusations led to an official European Union antitrust probe of Microsoft's Teams and Office products and Google's ad platform and search engine just this summer. And the EU has shown a willingness to put some bite behind these kinds of bundling charges, with judgments of 4.1 billion, 2.4 billion, and 1.5 billion euros against Google in recent years.

Bundling aside, the EGDF implies that Unity's previous royalty-free structure was a form of artificially low price-dumping designed to hurt competition before jacking up the price with the new install fees. "It is clear that if Unity’s pricing model had, in the past, been similar to the now-introduced model, it would likely never have achieved the level of dominance it enjoys today, as more developers would have chosen another alternative in the beginning," the EGDF writes.

To prevent companies like Unity from exploiting their market power in this way, the EGDF urges EU governments to create new regulations focused on reining in "non-negotiable [business to business] contract terms." Such regulations might force companies to give "sufficient time" (e.g., six months) before unilateral changes to terms of service go into effect.

"Game productions can take years, and game developers cannot change their game engine at the last minute, so they are forced to accept all changes in contract terms, no matter how exploitative they are," the EGDF points out. "Unity must know that if they had given more notice, many more developers might have had a realistic chance of abandoning Unity altogether by the time the new pricing came into play."

The EGDF also urges regulators to consider making engine makers like Unity subject to the Digital Markets Act, which would put it in the company of other so-called "gatekeeper" online platforms like YouTube, Amazon, TikTok, Twitter, and LinkedIn. DMA identification would subject Unity to strict new rules and "ensure that Unity cannot use data it collects through its game engine to gain an unfair competitive advantage for its other services like advertisement services," according to the EGDF.

The EGDF also says governments should consider offering financial support to "privacy-friendly open-source alternatives for game engines" such as Godot. Such financial support could help solve the "market failure" that has allowed a company like Unity to have outsize power over game developers' livelihoods in the first place.

After seeing the "confusion and angst" that its announcement caused across the game industry last week, Unity has promised vague "changes" to its proposed fee structure will be announced soon. But any such changes may come too late for many developers, who have said they are moving on to other engine options because they feel they can no longer trust Unity as a reliable partner.