GME3: A Fine Mess, Google Makes News & Pays Dues, and Kids Have the Darndest Data

This week’s GME3 features a significant fine levelled against Entain in the UK, a resolution to Canada’s conflict with Google over news publications, and an update on the Meta lawsuits currently ongoing in the US. Read on for more!

Gambling

A Fine Mess

The international sports betting conglomerate Entain has been hit with a $729 million fine as part of a Deferred Prosecution Agreement (DPA) with the United Kingdom’s Crown Prosecution Service (CPS).

The fine is a result of a years-long investigation into alleged bribery at the company’s former Turkish business. While we’ve been unable to find exactly what Entain is being accused of, the announcement of the DPA contained some information. Entain’s Turkish business, which was sold in 2017, as well as third-party suppliers and former employees, are accused of violating Section 7 of the Bribery Act 2010, Failure of commercial organizations to prevent bribery. Essentially, the CPS accused Entain of failing to have adequate procedures in place to prevent bribery from occurring. 

On top of the $729 million fine, which is scheduled to be approved next Tuesday, December 5, the agreement also requires Entain to donate an additional $25 million to charity, as well as allocate around $12.5 million to the HMRC (the UK’s tax authority) and the CPS to cover costs for the initial investigation. 

This fine is a substantial penalty – though Entain owns UK betting brand Ladbrokes, South American operator Sportingbet, and 50% of BetMGM (America’s third-largest sportsbook), $729 million is a significant amount of money. As of this week, Goldman Sachs has downgraded Entain from “buy” to “sell”. Goldman Sachs attributes this to “regulatory headwinds, increased competition and market dynamics,” in addition to the fine.  

Entain is certainly facing a difficult time as we head into 2024. In addition to the fine, BetMGM recently expanded to the UK without collaborating with Entain, instead opting to use the LeoVegas platform and technology which it acquired last year.

Media

Google Makes News, Pays Dues

The Canadian government has officially reached an agreement with Google over Bill C-18, also known as the Online News Act.

Yesterday, Canadian Heritage Minister Pascale St-Onge announced that Google will resume sharing Canadian news content on its platform, and will make $100 million in annual payments to news companies going forward. The financial support will be indexed to inflation, and is planned to be distributed to “a wide range of news businesses across the country, including independent news businesses and those from Indigenous and official-language minority communities.”

The fight over Bill C-18 began earlier this June when the Act was introduced. The Act aimed to create a framework for digital behemoths, like Google or Meta, to provide compensation for Canadian news content that was hosted on their platforms. However, these companies initially reacted strongly – instead of paying Canadian news organizations, they opted to block Canadian news from their platforms entirely.

Google indicated that it had some concerns over Bill C-18 that were not resolved during the legislative process, even calling it a “link tax” that “breaks the way the web and search engines have worked for more than 30 years. Google was also concerned over the potential for “uncapped financial liability.” While it is currently unclear what changes (if any) are planned for Bill C-18, more details are planned to be shared prior to the Act coming into effect before the end of the year.

Entertainment

Kids Have the Darndest Data

The legal complaint brought against Meta by the attorneys general of 33 US states has been unsealed. In the complaint, it is alleged that Meta received over 1.1 million reports of underage (meaning under 13 years old) users on Instagram since 2019, but disabled “only a fraction” of them.

Instead, Meta continued to collect data from these underaged users without parental consent. Data collected included locations, email addresses, and more. According to the complaint, this is in direct violation of the Children’s Online Privacy Protection Act (1998), which requires that online services with content aimed at children obtain permission from a parent before collecting personal details from users under 13. Violating this Act can carry penalties of over $50,000 per violation. As such, Meta could face significant penalties – hundreds of millions of dollars or more – if the states can successfully prove their allegations.

As the complaint says, “Within the company, Meta’s actual knowledge that millions of Instagram users are under the age of 13 is an open secret that is routinely documented, rigorously analyzed and confirmed, and zealously protected from disclosure to the public.” The newly unsealed complaint uses internal emails, employee chats, and presentations from Meta to make the case that the social media giant not only allowed these users to continue using their platforms but “coveted and pursued” underaged users. This is demonstrated in Meta’s failure to create adequate age-verification systems which allow underage users to easily lie when creating a new account. Furthermore, an internal company chart included in the newly unsealed material shows how Meta tracked the amount of 11 and 12-year-olds who used Instagram daily.

In a statement over the weekend, Meta claims that the states’ complaint “mischaracterizes our work using selective quotes and cherry-picked documents.” Regardless, these cases have the potential to carry serious consequences for Meta, and the social media industry as a whole.