The Rise of Generative AI in Gaming and Its Legal Challenges (Part 3)

The first part of this series underscored the opportunities that generative AI (“GenAI”) presents for the gaming industry. It also detailed the unique issues that emerge in contract law. The second part delved into the effects of GenAI in games on intellectual property, platform law, and forthcoming AI regulations in the EU. In the third part of the series we provide some insights into Consumer Protection Law, Advertising, and Data Protection - three partially overlapping key legal areas affected by the integration of GenAI into games.


Read the first part in this series here and the second part in this series here.

Navigating Consumer Protection Laws in GenAI-Enhanced Gaming

The integration of GenAI into the gaming industry will bring Consumer Protection Laws back into focus. These laws, designed to protect the rights of players as consumers, now present new legal challenges and responsibilities for developers, three of which are highlighted in the following:

Statutory Laws regulating the Use of General Terms and Conditions

The implementation of GenAI in the gaming industry underlines the need for clear and compliant terms and conditions (“T&Cs”). This is particularly important in jurisdictions with above-average consumer regulation, such as Germany – where the clarity, fairness, transparency and content of T&Cs are heavily regulated. Game developers need to ensure that their T&Cs are free of ambiguous terms and do not impose unfair terms on players, particularly in relation to limitations of liability.

In addition, the rise of GenAI requires that T&Cs explicitly address how these technologies affect game mechanics, content and player interactions. This clarity is essential not only for legal compliance, but also for maintaining player trust. Moreover, the global nature of gaming means that T&Cs need to be available in the languages of all target audiences to improve understanding and compliance. It is also important to manage changes to the T&Cs, especially when products and services are constantly changing due to GenAI. Changes must be communicated transparently and often require player consent, reinforcing the principles of transparency and trust.

Information Obligations Towards Players,

The use of GenAI in games has significant implications for the scope of developers’ information obligations, which are largely harmonised across the EU. Especially when an evolving immersive gaming experience is constantly producing new content that may be subject to payment.

  • Pre-Contractual Information Obligations: Before entering into agreements, developers must inform players about several crucial aspects in connection with their gaming offer. This includes the types of accepted payment methods, the total cost involved, and specifics regarding automated decision-making processes, particularly those influenced by GenAI.
  • Post-Contractual Information Obligations: Following a transaction, developers continue to bear certain responsibilities, for example, providing accessible T&Cs and confirming the details of the transaction.

One particular facet of the information obligations involves detailed disclosures about the use of GenAI within games. Developers must explain how GenAI uses player data, whether to improve game dynamics, personalise experiences or train AI models. This transparency is key to demystifying AI processes for players and maintaining a trusting relationship between players and developers.

The Player’s Right to Withdrawal

The integration of GenAI into the gaming industry underlines the importance of the player’s right of withdrawal, especially in the context of distance contracts. This EU-harmonised right, which provides for a 14-day cooling-off period, is a cornerstone of consumer protection in digital transactions. However, the advent of GenAI introduces new complexities, particularly in distinguishing between “digital services” (such as cloud gaming) and “digital content” (such as in-game assets).

The distinction between “digital services” and “digital content” is crucial, as they entail different conditions for the right of withdrawal. In the case of digital services, the right of withdrawal may expire immediately in certain circumstances, whereas the rules for digital content may be more ambiguous. The continuous creation of new content by GenAI, from personalised game environments to dynamic content elements, exacerbates these ambiguities. Developers are therefore challenged to clearly delineate the circumstances under which the right of withdrawal applies to each class of AI-generated assets.

It is imperative that players are fully informed of their rights, particularly in relation to GenAI-generated content. Developers must ensure that the conditions under which players lose their right of withdrawal are clearly communicated.

How Can AI-Driven Content in Games Navigate Youth Protection Law?

Youth Protection naturally plays a crucial role in the regulation of games. In addition to provisions for age rating for games distributed on gaming platforms or on physical data carriers, there are also provisions in Germany (1) for age gating for online content which are developmentally impairing or (2) per se inadmissible (e.g., youth porn).

When developers generate content with AI, they must comply with youth protection law just as they would with human creation. Therefore, there are no significant differences for pre-developed content, as the content must either be rated by the USK and/or be subject to (soft) age gating when going online.

It becomes more difficult when content is generated ad hoc in the game. If players or the game mechanism itself create potentially developmentally impairing or prohibited content ad hoc in the game, the gaming provider may in particular use a platform-like infrastructure that allows these contents to be reported and removed. If AI is used to constantly evolve an online-only game, further questions arise: A USK rating normally requires the evaluation of a self-contained game – but if a game continually evolves with new content or game mechanics, there would be the need for new USK standards for how games are rated. Alternatively, such AI-directed games could be seen as platforms which have to use (AI-)safeguards so that the AI does not create and publicly reproduce prohibited content (such as incitement to hatred) or content that is not permitted for certain age groups. This may require permanent work on the safeguards and monitoring.

How Can Game Developers Ensure Data Protection Compliance?

The introduction of GenAI into gaming is revolutionising the way player data is handled, enabling unprecedented volumes of data to be processed. With this innovation comes the critical responsibility of complying with strict data protection regulations, particularly the General Data Protection Regulation (“GDPR“) in the European Union. The GDPR mandates comprehensive safeguards for the collection, storage, processing and dissemination of personal data, while giving players significant control over their own data.

In this evolving landscape, it is imperative for developers to design and implement AI systems that prioritise player privacy and transparency. This is particularly important when player data is used as the basis for training GenAI models, such as those used to analyse player behaviour to refine future titles. The use of personal data in such contexts requires a strong legal foundation, typically relying on explicit player consent or other legal bases established by relevant legislation.

To manage these complexities, developers are encouraged to adopt a comprehensive data protection framework. This includes providing privacy notices to players, formulating transparent data management policies, and ensuring that players are always aware of how their data is being used.

Outlook: Navigating towards a new Horizon

The integration of GenAI into the games industry marks a transformative era for both game creation and player engagement. However, this technological advancement brings with it complex challenges, particularly in the legal arena – such as contracts and intellectual property.  These elements, combined with the ever-changing terrain of consumer protection, advertising regulation and data privacy, contribute to a multi-faceted regulatory environment that requires careful navigation.

In summary, while GenAI promises to open up new horizons in gaming, it also propels developers into a new realm of legal considerations. Managing this dual challenge will be critical. By balancing the exciting potential of GenAI with a strong commitment to legal diligence and ethical standards, developers can successfully navigate this new landscape and ensure that the future of gaming is not only innovative, but also safe and respectful of player rights and regulatory requirements.

Please contact Simon Hembt or Oliver Belitz for further updates or advice in relation to this topic.

Leave a Reply