August 5, 2025 • 35 mins
In this episode, lawyer Richard Hoeg explores the recent rule changes on platforms like Steam and itch.io, driven by the power of payment processors. He discusses the importance of understanding legality versus corporate policies, with a focus on Mastercard's influence and their public statements. Hoeg analyzes the media's misinterpretation of Mastercard's stance, Valve's response, and the legal implications of such policies. Concerns over Mastercard's broad discretion, enforcement, and antitrust laws are addressed, along with the effectiveness of petitions, direct action, and the long-term implications for alternative platforms.
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Episode Transcript
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(00:14):
Hello, and welcome to another episode ofvirtual legality.
I'm your host, Richard Hoag, managing member ofthe Hoag Law Business Law Firm of Northville,
Michigan.
And we're coming to you today with a follow-upepisode to a video we recently did in virtual
legality entitled we do not accept, which wasall about how Visa, Mastercard, and other
payment processors may or may not be requiringvideo game providers like Steam and itch.i0 to
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remove content that is otherwise legal in thejurisdictions in which they operate from their
services at the request of either activists orthe payment processors themselves.
Now this is a follow-up because things havechanged since we made that video, but it is not
the end of the story by any means.
So please stay tuned to the end of this videofor things that I think we can still keep doing
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on this very important story in the world ofvideo gaming and beyond.
So thank you for joining me today in virtualreality.
And if you like content like this, pleaseconsider supporting us through our Patreon,
memberships and super chats on our livestreams,or otherwise, as we found with the first video
here since we are gonna be saying words thatYouTube does not like.
And certainly in the context of defendingfreedom of expression and first amendment law
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in The United States, We're not going to beself censoring for the words that YouTube
doesn't like.
Leaving comments to this video.
If you've got comments, if you've got concerns,things that got right, things that got wrong,
that seems to really be helping videos likethis one get out there into the YouTube
ecosystem or the podcast ecosystem if you'relistening to this later on.
And if you could comment on it, I would really,really appreciate it.
(01:43):
So thank you for that.
And now we can get on with the substance of ourvideo.
So first, just in summary of what we've beentalking about in our prior video and now, I
wanted to give you a a a 30,000 foot overviewof what's happening.
So here's the Guardian saying why did thousandsof adult titles just disappear from the biggest
PC gaming marketplaces?
Digital distribution platform Steam and itch.i0have tightened their rules about adult content
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under pressure from payment processors.
Why has this happened and where will it lead?
So this article says, payment processors suchas Mastercard, Visa, and PayPal are behind all
this.
They then say the rules that were establishedafter a campaign by the organization Collective
Shout, which we talked about in our priorvideo, urged payment processors to stop
facilitating payments to platforms hostingrape, incest, and child sexual abuse themed
(02:30):
games.
And you can see why I just mentioned YouTube'snot gonna love anything I have to say in this
video, so everything you can do to get messageslike this one out there is very much
appreciated.
How did this start?
On sixteen July, Valve, the developer of Steam,updated its rules and guidelines regarding the
games and software that can be distributed onthe platform.
The rules, which already prohibited, and thisis important, neuter sexually explicit images
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of real people and adult content that isn'tappropriately labeled or age gated, as well as
things that are just illegal on their face,were expanded to include content that may
violate the rules and standards set forth bySteam's payment processors.
And we commented on that in the earlier videothat this may violate is entirely opaque and
almost impossible to align yourself with ifyou're on the developer side, let alone the
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Steam side.
But as the story has continued, we can start tosee why Valve didn't make any more strong a
statement here and just provided all thisflexibility for themselves to say this
particular piece of software doesn't complybecause they don't appear to know what complies
or doesn't comply any more than we do.
And so that's a part of this story absolutely.
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A week later, itch.
Issued a statement explaining it had also comeunder scrutiny from payment processors.
Unlike Valve, itch specifically referencedCollective Shout as the cause of the renewed
scrutiny.
In April, this group, Collective Shout,successfully petitioned to have the game No
Mercy removed from Steam and itch.io.
After this, the group published an open letterto payment processors claiming to have
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discovered hundreds of other games featuringrape, incest, and child sexual abuse on both
Steam and itch.io.
And as I said in my prior video, no one wantsto be seen as defending these things.
These are, quote, unquote, icky topics foranybody.
That is how censorship starts.
That's why I'm making this video and the videolike it beforehand because this is very
important to me, and I think it should beimportant to anybody that wants to experience
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media, books, videos, video games, television,movies, whatever you wanna think of it as, in a
way that goes without censorship bycorporations like Mastercard and Visa.
And they request payment processors demonstratecorporate social responsibility.
This is Collective Shout speaking now, andimmediately cease processing payments on Steam
and itch.
After Steam altered its rules, Collective Shoutclaimed credit for the change, stating that
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more than a thousand of its supporters hadcalled or emailed payment processors to make
their demands.
Now like many other online retailers, Steam andItch rely on payment processors to enable users
to make purchases on their platforms.
As such, these companies hold considerablepower and can influence what products
regardless of their legality, and that's thesuper important part here, are bought, sold, or
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published.
Right?
Regardless of their legality.
That's what you need to take away from thisvideo if nothing else is that we aren't
specifically talking about things that yourgovernment or mine has determined are
unacceptable experience.
We're talking about the things that the societyhas allowed that now Visa and Mastercard and
whoever's running them on any given day havedetermined or beyond the pale for them to move
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money between one bank and another order foryou to purchase that good from the good
provider that wants to sell it to you andlegally so.
This article continues for more of the summary,but I wanted to give that 30,000 foot overview
because as we talked about in our prior video,I think this is patently unacceptable for any
western democracy to allow for these kind ofcorporations to get in the way of what is
(05:50):
freedom of expression both on the sell side andthe purchasing side.
And in the interim between that video and thisone, Mastercard also felt it necessary to talk
about this a bit.
So they put out a statement on their socialmedia platforms that says clarifying recent
headlines on gaming content.
Mastercard has not evaluated any game orrequired restrictions of any activity on game
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creator sites and platforms contrary to mediareports and allegations.
Our payment network follows standards based onthe rule of law.
Put simply, we allow all lawful purchases onour network.
At the same time, we require merchants to haveappropriate controls to ensure Mastercard cards
cannot be used for unlawful purchases,including illegal adult content.
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Now there's a lot there.
We're gonna unpack it.
That's what the purpose of this video is.
But suffice it to say, the very first thing Iwould note here as a corporate lawyer is that
no one should read this and assume thatMastercard or companies that make statements
like this are lying.
These companies don't lie on their face.
They don't say something that is patentlyuntrue because their lawyers in general won't
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allow it.
Now there are exceptions to every rule justlike this one, but for the most part, you can
rest assured when you read a statement likethis that this is not a lie insofar as it is
specifically making a false statement.
In fact, it's more of a technical omission.
You can read between the lines.
We're gonna talk about that process as part ofthis conversation.
But the way I talk about it to my clients andto my friends and family is to think of the
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cookie jar.
Right?
If you've got a toddler or a youngster in yourhouse and there are mysteriously missing
cookies and they say and you go to them and yousay, alright.
Did you take a cookie out of the cookie jar?
And they say, no.
Absolutely not.
I would never put my hand in the cookie jar.
Then you look at that statement and you say,alright.
Did you tip over the cookie jar and take thecookies off the counter?
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And they might well tell you the truth at thatpoint.
But you can see the difference between a actuallie and a technical lie whenever you talk to
any toddlers or young people in your life.
This is the way you should treat corporatestatements.
Remember the cookie jar.
Think of the fact that you can tell a lot oftechnical truths without telling the complete
and absolute truth, and that for the most part,the law can't do much about it in those
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specific situations because we don't want tooutlaw any possible kind of omission or elision
of what the truth behind what you're askingabout actually is because we don't want the
governments of the world to be in theirpolicing speech, which is exactly what this
topic is entirely about in the first instance.
So remember the cookie jar.
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But if we remember the cookie jar when we readthis, we'll note a couple of things.
One, that Mastercard only really says that wedidn't specifically go in and evaluate the
games that are available on Itch or on Steam.
Right?
And no right thinking person would expect thisabsolutely huge multinational corporation to go
in and check out the incest games on Steam todetermine whether or not they were something
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they wanted their brand associated with.
No.
That's not how this works.
So they really didn't say anything in the firstpart of this statement.
Then the second part is a little bit closer tomaybe the lie line as we will see in a minute,
but still doesn't actually say what they wantyou to read it as saying.
So they say our payment network followsstandards based on the rule of law.
Totally fine.
Totally fair.
We would expect any corporation to basicallysay, at least in their documentation, that they
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intend to follow the law.
I would note here as a lawyer that they don'tactually say that their network only requires
following the law or following the law of thejurisdiction in which the payments are being
processed, it says that we have standards whichare already not laws.
There's something else, the rules, theirpolicies, their procedures, and those don't
reflect the rule of law.
Those don't exactly follow the rule of law.
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They are based on the rule of law.
Anyone that has ever watched a movie that isbased on their favorite book or real life story
knows that there's a lot of leeway between isthe actual story and what is based on that
story.
Right?
So the rule of law says, we don't like murder.
We don't like rape.
We don't like incest.
Those are actual laws in the variousjurisdictions.
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We tend to take a different tact in governmentsthat have free expression on whether or not you
can actually include those things in yourfictionalized stories or other media content.
So you could still say we are outlawing alldepictions of murder, all depictions of rape,
all depictions of incest, and state prettytruthfully that that's based on concepts of the
(10:24):
law.
We are outlawing depictions of things that areotherwise outlawed, but it isn't actually
reflective of the rule of law because freedomof expression demands that we can allow
certainly artistic expressions, but maybe evennonartistic expressions of those things that
are otherwise illegal in the jurisdictionswe're talking about.
Now if that's all too complicated tounderstand, I don't blame you for that either.
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This statement from a corporation is designedto be too complicated to understand.
It's designed to have you look at that sentenceand say, they mean they're following the law,
and say, okay.
Mostly, but not entirely.
Put simply, we allow all lawful purchases onour network.
Now this is interesting because they do allowthem because they really don't have another
choice but to allow them except that they canput pressure separate from the initial
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allowance to say we don't want you to beworking with these particular purveyors of
goods any longer in the future.
But as it stands right this second, if they areon the storefront, we'll allow that purchase.
But you Steam, you itch.io, you should reallylook at what you're selling in the first place.
So they can say this statement that we'relooking at right now while still meaning
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something else.
At the same time, we require merchants to haveappropriate controls to ensure Mastercard cards
cannot be used for unlawful purchases,including illegal adult content.
Now that makes all the sense in the world.
Right?
We just talked about the fact that we're gonnafollow the law if we're a multinational
corporation.
We're not going to lie in statements like this.
The lawyers won't let us.
And so all we are saying now is we didn'tevaluate any of the games separately.
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Our network is based on the rule of law, and werequire our merchants to have controls that
mandate that they follow the rule of law orelse they can't use our card.
Who could object to any aspect of this?
However and there's always a however if we'rein virtual reality.
Right?
This gets reported on exactly the wayMastercard intended, but not with respect to
what they actually said.
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As we can see here from the top line item, IGNhas a headline that says Mastercard denies it
pressured steam and inch.i0 to delist adultcontent.
We see similar headlines throughout the entiremedia complex here, so I don't wanna single out
IGN specifically for this other than to say allof these headlines are not doing the hard work
of reading the statements put out bycorporations like Mastercard while remembering
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the cookie jar.
And I know I just talked to you about thecookie jar, but journalists should already be
trained in thinking about the cookie jar.
Right?
Corporations don't want the bad news to get outthere.
They don't want anything that reflectsnegatively on them.
In fact, that's part of what this story is allabout.
So you should go into any statement with a kindof adversarial positioning.
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If you're a journalist or otherwise justsomebody that wants to get to the truth of the
matter, if you are a critical thinker and acritical reader, you wanna look at a statement
like Mastercard says and say, what are theysaying and what aren't they saying?
Going into the process specifically trying tosquash down your reading between the lines and
interpreting for Mastercard what it intendswhen you can only really take what it is that
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they actually said for the truth of the matterasserted.
So if we look at this whole thing, we've got anentire video game journalism industry that just
takes on its face what Mastercard said as notbeing very responsive to what Valve and itch
dot were saying at the same time.
Now that gets a little bit more interestingwhen Kotaku goes out there with an article very
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similar, and you saw it in the highlights thatwe just pointed out, that says Mastercard
denies pressuring Steam to censor not safe forwork games.
And they start this article by sayingMastercard released a statement on Friday
denying any responsibility for a new wave ofcensorship.
That is not what Mastercard did.
We just looked at the statement they made inits entirety.
What they said were a series of statements thatare somewhat adjacent to not being censorious,
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but don't actually say Mastercard Mastercarddidn't play a part.
A a more realistic reading of this would say,okay.
You didn't evaluate the game separately, butyou certainly went through the vectors that you
had at your disposal, and you got a messagefrom Collective Shout or otherwise that says
they've they're selling stuff you wouldn't likeMastercard and said, okay.
Why don't you go see if that's in fact thecase, payment processors in our network, and
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make sure that they aren't doing other thingsthat are illegal, and that came back with the
same effect.
But Kotaku doesn't wanna do that.
Kotaku just says, but to be clear, Mastercarddoesn't say it hasn't been involved at all.
A number of paragraphs in and certainly beyondthe headline that most people are going to
read, just that it's gone no further furtherthan enforcing its existing guidelines against
unlawful purchases, including illegal adultcontent.
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And in fact, Mastercard didn't say that either.
They just said, we have these standards thatrequire our payment processor partners and the
merchants to follow the rules that we putforth, including rules against illegality.
But as we'll see in just a moment, those rulesextend past illegality.
In a statement to Kotaku, a spokesperson forValve said, oh, now we're getting into it real.
(15:04):
We've got the update from Kotaku here, and thisis where the actual story changes in its
entirety, and this gets reported on in variousother outlets after it happens.
But if you had been remembering the cookie jarand if you had read the statement with that in
mind, you would already know what Valve isabout to say, which is that while Mastercard
did not communicate with it directly, wewouldn't expect that from a company the size of
Mastercard against a video game seller,Concerns did come through payment processor and
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banking intermediaries.
They said payment processors rejected Valve'scurrent guidelines for moderating illegal
content on Steam, citing Mastercard's rule fivetwelve seven, and we will see that in just a
minute.
Mastercard did not communicate with Valvedirectly.
Despite our request to do so, Valve statementsent over email to Kotaku reads, Mastercard
communicated with payment processors and theiracquiring banks.
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If you pause here and say, Rick, didn't youjust tell me Mastercard is a payment processor?
They are, but they're also the operator of thenetwork of payment processors.
So when we are talking about this entiresubject matter, we're talking about Visa, we're
talking about Mastercard, we're talking aboutPayPal as payment gates, as payment processors,
and in the respective Mastercard and Visa, alsoas the operators of networks of payment
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processors.
So this entire kind of global economicsituation is more complicated probably than it
needs to be, but certainly more complicatedthan most people are gonna spend the time
learning.
I don't blame you for that.
What's important here is that Steam and itch.i0call this entire group their payment processors
because from their perspective, that's all theyare.
We don't really need to get into thedifferences there because it doesn't matter for
purposes of our conversation.
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They say payment processors communicated thiswith Valve, and we replied by outlining Steam's
policy since 2018 of attempting to distributegames that are legal for distribution.
Look, we have a requirement in our agreementwith our developers that says you're not gonna
put anything illegal on our site.
Payment processors say Valve rejected this andspecifically cited Mastercard's rule five
(16:51):
twelve seven and risk to the Mastercard brand.
More on that in just a minute.
Rule five dot 12 dot seven states, a merchantmust not submit to its acquirer, and this in
that case would mean the payment processorthat's closest to actually moving the money
between Valve and the purchaser, and a customermust not submit to the interchange system any
transaction that is illegal, sure, or and thisis where it gets a little bit controversial, In
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the sole discretion of the corporation, that'sMastercard, may damage the goodwill of the
corporation or reflect negatively on the marks.
Now let's break this down in legalese for youjust a little bit here.
The corporation is Mastercard.
We talked about that.
Damaging the goodwill of the corporation means,alright, you say that you can accept Visa and
Mastercard on your website, and so there's acertain amount of our cache, our intellectual
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property value that is now associated with theplatform in which you are selling something.
So we, in our license terms, can say you're notallowed to use the Mastercard name and in fact
our service if you are selling something thatmight damage our goodwill or reflect negatively
on the marks.
As a lawyer, this is not that on standard of aset of language.
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Right?
If we're talking about licensing out yourintellectual property like the mark Mastercard
or the little picture of the circles or themark visa or what have you, then in general,
you have a vested interest in making sure thatisn't associated with very bad things that
could otherwise hurt the value you are tryingto put into your brand.
That's one of the reasons why in the priorvideo in virtual reality, I talk about the fact
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that we wanna make clear that Visa andMastercard are not associated with what the
actual sales front is selling as much as theyare associated with the movement of money
properly, efficiently, and correctly betweenbuyer and seller.
And we wanna continue to make that clear if wecare about this situation and freedom of
expression because the only hook that they canhang their hat on is that if you see Mastercard
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or Visa in that little payment box on Steam oron itch.io, then they have something to lose if
they if you are buying something personallythat they don't approve of.
And we wanna separate that out as much aspossible.
Now some people did come into the comments tothat video and point out that I believe it was
Visa had gotten a bad judgment against them forbeing responsible for certain payments that had
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been made through their interprocessing system.
I think as a part of this conversation, wewanna make clear that there really shouldn't be
legal liability for that, and certainly not ifthey are otherwise acting as a common carrier
as we talked about in the earlier video.
They should only really take on liability forthe sales that are made through their inter
processing systems if they're willing to takeon liability for every sale everywhere, which
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they certainly aren't.
And that could be another legal avenue to fightthis particular cause of censorship if we wound
up going down that road.
It goes on to say the sale of a product orservice including an image which is patently
offensive and lacks serious artistic value,such as by way of example and not limitation,
images of nonconsensual sexual behavior, sexualexploitation of a minor, nonconsensual
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mutilation of a person or body part, andbestiality, or any other material that the
corporation deems unacceptable to sell inconnection with a mark would be a problem under
this particular rule.
Violations of the rule can cause major issues.
So what we've got here is that Mastercard sayswe didn't look at the game specifically, we
just enforce legality through our rules.
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And then by Valve's statement and by the ruleitself, which we can look at here, excuse me,
for just a moment, we can see that theyactually do quite a bit more than just fight
illegality.
In fact, we look at rule five dot 12 dot seven,we see under the headline, it's illegal or
brand damaging transactions.
So just by the headline alone, before readingthe language here that we saw summarized in
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Kotaku already, we know that it's more thanjust illegal transactions.
It has to be more else we wouldn't have toinclude a separate category in the headline.
It's brand damaging transactions as well.
So they say a merchant must not submit to itsacquirer and a customer must not submit to the
interchange system.
Any transaction that is illegal, really nothingcontroversial there, or in the sole discretion
of the corporation may damage the goodwill ofthe corporation or reflect negatively on the
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marks.
And as we talked about before, that's wherethings get into trouble.
The corporation considers any of the followingactivities to be in violation of this rule.
The sale or offer of sale of a product orservice other than in full compliance with the
law, sure.
The sale of a product or service including animage which is patently offensive, obviously
and clearly offensive, and lacks seriousartistic value.
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Now that's them trying to get around certain ofthe freedom of expression and freedom of speech
kind of concerns.
There are areas even in American law where yousay if something is just obscene and has no
artistic meaning, then maybe we can outlaw it.
Those are older precedents for the most part,but they are on the books.
Then we have the examples that Mastercardgives, such as by way of example and not
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limitation, meaning that this is not anexhaustive list.
That's what it means legally is that this isjust examples and there could be more.
We're not telling you.
Images of nonconsensual sexual behavior, sexualexploitation of a minor, where video games
really getting into trouble, nonconsensualmutilation of a person or body part.
Can you even imagine how many video games havethe nonconsensual mutilation of a person or
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body part?
I can't, and bestiality or any other materialthat the corporation deems unacceptable to sell
in connection with the market.
Now, actually, even though they give thatexample list and that seems to be what people
are reacting to, especially with respect tomutilation, that list is not exhaustive, and
the real problem is that the rest of thelanguage of this section talks about anything
else they deem unacceptable.
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As we mentioned in our first video, this doesnot have to be limited to adult content at all.
What could the corporation deem unacceptable?
Maybe Mastercard just winds up hating blondesat some point.
Maybe Mastercard decides that what'sunacceptable to them is any notion of
republican policy or democratic policy or,heck, democracy itself.
(22:42):
If those are unacceptable, then Mastercard isreserving for its right the ability to cut off
your payments.
And since they are such a big corporation,since they and Visa are effectively a duopoly
in the payment processing realm, then this istremendously problematic for anybody that is
out there selling anything that is remotelyartistic in nature.
(23:03):
Right?
So they can come in and say, well, it doesn'thave artistic value, lack serious artistic
value.
That's already a legal weasel term that allowsthem to determine what serious artistic value
or not.
Patently offensive is just to them.
This is just them evaluating what's happeninghere.
And if Steam and Itch dot I o don't fight thisright now, there's really no limiting principle
(23:23):
that prevents Mastercard or any of the otherpayment processors from trying to enforce this
even more ruthlessly than it currently is.
Now you might also say, Rick, if that's trueand nobody can tell what it is they're talking
about here because the list is not exhaustive,it's anything that's offensive to them on any
given day, and anything else they might deemunacceptable to sell in connection with a mark
(23:44):
with no other legal parameters put around thatconcept at all, then how can anybody comply
with this?
And that's where you kind of get into Steam andItch and other folks even before this whole
thing broke out deciding on their own to takedraconian steps to push down on what is
probably protected speech, in various of thesejurisdictions because they don't wanna run
(24:08):
afoul of this line that they don't even knowwhere it is.
An acquirer that has been notified ofnoncompliance with this rule and that fails
promptly to cause the noncompliant process tocease or that has been notified multiple times
regarding violations of this rule is subject atthe acquirer's expense and in addition to any
other noncompliance assessment or otherdiscipline or both to any one or more of the
following.
So again, here the acquirer is a paymentprocessing unit of some kind that is closest to
(24:32):
Steam or the buyer, but primarily closest toSteam in connection with this particular
example.
And they are being told by Mastercard that,look, if you don't take appropriate steps to
make sure that you aren't facilitating the saleof things that we think are other illegal or
otherwise harmful to us, then we can do thesevarious things.
We can review your acquirer status.
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We can audit you at your sole expense by anauditor selected by us, or we can put you on a
rule on the match pro system.
Otherwise, we can blacklist you as noncompliantwith what you're doing.
That's obviously a problem if you're otherwisein the payment processing business.
And so Mastercard is out there swinging itssword around and otherwise telling people what
(25:18):
to do on a premise that is no more specificthan what we just outlined in 5.
12 dot seven paragraph two.
Now there's actually two paragraph twos herethat's so that's not terribly easy to cite, but
this isn't the tightest piece of code aswritten law or rule here for Mastercard, which
is one of the reasons why the American CivilLiberties Union, the ACLU, said in a paragraph,
(25:39):
adult content is constitutionally protectedspeech under the first amendment.
As our complaint explains, Mastercard's vagueand ambiguous policy requirements coupled with
the dangerous combination of platformovercompliance, that steam and itch taking
things down that they might not even have totake down under the plausible deniability of
Mastercard saying, we didn't talk to youspecifically.
We talked to our payment processors, and thenthey're gonna enforce our rules as they see
(26:02):
fit.
So that overcompliance and inadequate automatedtools has led to the vast censorship of this
entirely lawful category of speech.
Say, okay.
The ACLU is on it, Rick.
So why do we have to do anything here?
Well, for one, this is an article from 2023.
This is a number of years ago and talks aboutMastercard putting this particular rule in
(26:22):
place back in 2021.
The other aspect of this that I wanted to pointout for y'all is you asked me about antitrust
laws.
You asked me about the Department of Justiceand Federal Trade Commission, and the ACLU
pursued this course of complaint with the FTC,the Federal Trade Commission.
And I will tell you right now as a lawyer, justlike I did in the prior video, that this
appears to be a losing type of argumentprimarily because the antitrust laws in The
(26:45):
United States are mostly concerned withmonopolistic behavior that is designed to
increase your monopoly power, is designed tokill competition or otherwise help you out in a
business sense.
And there's nothing here that anybody can pointto that suggests that Mastercard, Visa, PayPal,
or anyone else is out there trying to do thisby virtue of wanting to control their
(27:07):
marketplace more to to push down on competitorsand otherwise to increase their monopoly power.
So the antitrust laws are a pretty poor fit forthis, and I haven't seen any movement on the
complaint that the ACLU filed with the FTC in2023 that I could find.
But it wouldn't surprise me if the FTC being analready somewhat feckless body as we saw in
(27:27):
Microsoft versus Activision and in the numberof lawsuits they lost in the prior few years
already did not take up this particular requestto fight a multinational corporation like
Mastercard or certainly didn't take it up withany level of speediness.
And so the ACLU went out there with a perfectlyvalid complaint and a perfectly value valid
issue here, but probably did not direct theirattention, their force, their might, their
(27:52):
political power in the right direction.
So one of the things I wanna do with this videoin virtual reality and with the prior video in
virtual reality is to help you all think aboutwhat you can do if this is of concern to you.
Right?
So we did this in the prior video, But what youcan do here, I've divided into three kind of
broad categories, reading, writing, andarithmetic.
(28:13):
Because I find these little kind of easy waysto think about things helpful when I'm thinking
about them myself out in the field.
I wanna talk about reading first.
Remember the cookie jar.
Right?
Don't jump into assuming what you don'tactually read on these statements.
If you're a journalist, don't put headlinesthat suggest something is happening that isn't
fully happening.
(28:34):
Assume the corporations are at least lightlyadversarial to you in what they are
communicating and that you can only take on itsface exactly what they have put in the
statement before you.
Second, if you do that, you don't need me.
You don't need me to interpret these things foryou.
We all have minds that can critically thinkabout these things.
And if you go back to the Mastercard statement,you can read through each sentence, remembering
(28:55):
to read them independently and see, okay,they're trying to paint this picture that
they're not asking too much of these variousbodies, but what they're actually saying is we
didn't do anything directly.
We wouldn't have expected you to.
You did it indirectly.
That's what Valve admits in their statement toKotaku.
And while you say we only prevent things thatare illegal, we can tell that you are saying
that separate from the actual action that ishappening here with respect to Steam and
(29:18):
ish.io.
And if you read it that way and you understandthat you don't need me to make videos on this
because I certainly can't cover every aspect ofthis or any other topic really in the law and
business of video games or otherwise at thispoint in time, then you'll be well ahead of the
pace by the time Kotaku gets its statement fromValve.
You will look at those articles from IGN andother places and say that's not quite what
(29:39):
Mastercard said, and you will be betterinformed than a lot of your peers on these
particular topics.
Now before we get to writing, I do wannamention that other people have flagged for me.
There is a change.org petition going aroundabout this particular issue that says among
other things, we demand that Mastercard, Visa,and their pressure partners stop censoring
(30:00):
legal fictional content that complies with lawand platform standards, reject influence from
activist groups that promote moral panic ormisrepresent fiction as harm, be fully
transparent about content restrictions and therationale behind them, and four, protect
creators' rights to make legal adult contentand ensure a fair appeals process for any
penalized media.
Now I don't wanna tell anybody that's watchingthis video or listening to it as a podcast not
(30:23):
to do what you feel is necessary on things likethis.
You can sign this absolutely if you wannasupport something like this.
But I will tell you from a practicalperspective that unlike actually contacting
Visa or Mastercard directly, unlike the otherthings that we're gonna talk about in respect
of what you can do on this particular issue,this seems to me to be the most unlikely to
(30:45):
actually effect change here.
The reason Mastercard Mastercard makes astatement that we saw and we can analyze in
virtual reality is because they are feeling acertain amount of social pressure from corners
that are directly talking to them.
You can hear reports.
You can see reports all over the place thatpeople are calling Mastercard or calling Visa
and having these conversations with paymentprocessors across the globe, I think, all
(31:06):
honesty.
And that's gonna be more effective thaneffectively signing a a petition that says we
want you to stop doing this.
Right?
You're gonna need to hit them on their bottomline.
And in this particular case, their bottom lineis the social cost in engaging in this kind of
censorship.
I can't promise you that they're gonna changetheir ways, because you call them up and talk
(31:26):
about these things.
But what I can tell you is that the statementthat they make doesn't exist if they don't
think that there is some additional social costto what they had already anticipated when they
decided to take this course of action.
Now in terms of the writing step, you wannakeep that pressure on.
You wanna keep those phone calls coming.
You wanna keep those emails going.
You wanna keep this topic at the top of ourconversation of video games and technology in
(31:50):
general.
This is something we can't just sweep under therug.
We can't just forget about tomorrow as often asthat happens in social media and these other
spaces.
We need to keep our foot on the pedal and keepmaking sure that Mastercard, Visa, the payment
processors in general know that this isunacceptable and know that if they take this
step, they are going to be seen as plutarchs.
(32:12):
They are gonna seen as oligarchs that aretrying to control what people can buy, what
people can think, what people can see, and thatthat is not gonna work in a modern western
democracy in 2025 and beyond.
And so that at bare minimum, if they don'tchange their ways right now, the next time
something like this comes up, they are talkingin their boardrooms and they're thinking
(32:34):
through, alright, is this gonna have a socialcost to us?
Is this going to hurt our marks?
Right?
Ostensibly, if what we are concerned aboutabout is the value of our intellectual
property, if we're gonna take a step thatactually hurts the value of that intellectual
property, that's something we shouldn't do.
Also, you wanna know what's effective from whatis ineffective.
Right?
I just talked about the petition, that we sawearlier.
(32:57):
I I don't think that's an effective way to useyour time or energy.
I'm not gonna tell anybody not to do that, justthat it's not gonna be as useful as actually
taking the steps to put the pressure on Visa,Mastercard, and also to put the pressure on
Steam and itch.io.
They are the ones that are closest to thisparticular situation.
They are the ones that have the most money togain or to lose, and to help them understand
(33:17):
that if they yield on this particular score,Mastercard and Visa are the ones that actually
control their storefront, not them.
And if this continues on in that direction,they're not gonna control much of anything.
Now you can do that with keeping your moneyfrom them as we'll talk about in arithmetic.
You can talk you can do that by supportingothers that are their immediate competitors.
Right?
So I want you to keep encouraging the fight.
(33:38):
I want you to keep supporting the fighters.
The fighters here in this particular case areare good old games.
GOG and game publishers launchedfreedomtobuy.com or .games to raise awareness
on censorship in gaming.
They put out a number of games for free overthe last couple of days, many of which you
probably don't want in your libraries or toshow your mom or dad, but they're doing this to
(33:58):
fight that censorship.
And you're gonna wanna support those things ifyou care about this particular circumstance.
That those things will be seen.
The bottom line will be seen more than thepetition that says stop doing this.
And so I want folks to be focused on what it isthat they can do to encourage the fight, to
support the actual fighters that are engaged inthis.
(34:19):
Itch dot I o, I know, is also examining whetherthey can find other payment processors that
they can use outside of these networks that aretrying to censor what they make available.
You wanna support those initiatives, whetherit's with your words or with your dollars, if
you care about this particular topic.
And if you wanna continue caring about thisparticular topic and want me covering it more,
you can support channels like this one throughPatreon memberships and super chats on our
(34:39):
livestreams.
Just telling people that we're having theseconversations, telling your friends to come
check out these conversations, or as Imentioned at the top, leaving comments,
comments, and comments to this video becauseYouTube likes that and it's not gonna like a
lot of the terminology we used in thisconversation.
I wanted to get you in and out quick of thisepisode.
So thank you so much for joining me today, andI will catch you on the next VirtualEgality
(35:02):
where hopefully we're talking about something alittle less existential than whether or not we
can enjoy any media that we want without thepermission of Visa, Mastercard, and other
payment processors.
Virtual Legality is a YouTube video series withaudio podcast versions presented as commentary
and for education and entertainment purposesonly.
(35:24):
It does not constitute legal advice and doesnot create an attorney client relationship.
If you have legal questions about the topicsdiscussed, please consult your own legal
counsel.
Hello, and welcome to another episode ofvirtual legality.
I'm your host, Richard Hoag, managing member ofthe Hoag Law Business Law Firm of Northville,
Michigan.
And we're coming to you today with a follow-upepisode to a video we recently did in virtual
legality entitled we do not accept, which wasall about how Visa, Mastercard, and other
payment processors may or may not be requiringvideo game providers like Steam and itch.i0 to
(00:37):
remove content that is otherwise legal in thejurisdictions in which they operate from their
services at the request of either activists orthe payment processors themselves.
Now this is a follow-up because things havechanged since we made that video, but it is not
the end of the story by any means.
So please stay tuned to the end of this videofor things that I think we can still keep doing
(00:57):
on this very important story in the world ofvideo gaming and beyond.
So thank you for joining me today in virtualreality.
And if you like content like this, pleaseconsider supporting us through our Patreon,
memberships and super chats on our livestreams,or otherwise, as we found with the first video
here since we are gonna be saying words thatYouTube does not like.
And certainly in the context of defendingfreedom of expression and first amendment law
(01:21):
in The United States, We're not going to beself censoring for the words that YouTube
doesn't like.
Leaving comments to this video.
If you've got comments, if you've got concerns,things that got right, things that got wrong,
that seems to really be helping videos likethis one get out there into the YouTube
ecosystem or the podcast ecosystem if you'relistening to this later on.
And if you could comment on it, I would really,really appreciate it.
(01:43):
So thank you for that.
And now we can get on with the substance of ourvideo.
So first, just in summary of what we've beentalking about in our prior video and now, I
wanted to give you a a a 30,000 foot overviewof what's happening.
So here's the Guardian saying why did thousandsof adult titles just disappear from the biggest
PC gaming marketplaces?
Digital distribution platform Steam and itch.i0have tightened their rules about adult content
(02:07):
under pressure from payment processors.
Why has this happened and where will it lead?
So this article says, payment processors suchas Mastercard, Visa, and PayPal are behind all
this.
They then say the rules that were establishedafter a campaign by the organization Collective
Shout, which we talked about in our priorvideo, urged payment processors to stop
facilitating payments to platforms hostingrape, incest, and child sexual abuse themed
(02:30):
games.
And you can see why I just mentioned YouTube'snot gonna love anything I have to say in this
video, so everything you can do to get messageslike this one out there is very much
appreciated.
How did this start?
On sixteen July, Valve, the developer of Steam,updated its rules and guidelines regarding the
games and software that can be distributed onthe platform.
The rules, which already prohibited, and thisis important, neuter sexually explicit images
(02:53):
of real people and adult content that isn'tappropriately labeled or age gated, as well as
things that are just illegal on their face,were expanded to include content that may
violate the rules and standards set forth bySteam's payment processors.
And we commented on that in the earlier videothat this may violate is entirely opaque and
almost impossible to align yourself with ifyou're on the developer side, let alone the
(03:16):
Steam side.
But as the story has continued, we can start tosee why Valve didn't make any more strong a
statement here and just provided all thisflexibility for themselves to say this
particular piece of software doesn't complybecause they don't appear to know what complies
or doesn't comply any more than we do.
And so that's a part of this story absolutely.
(03:36):
A week later, itch.
Issued a statement explaining it had also comeunder scrutiny from payment processors.
Unlike Valve, itch specifically referencedCollective Shout as the cause of the renewed
scrutiny.
In April, this group, Collective Shout,successfully petitioned to have the game No
Mercy removed from Steam and itch.io.
After this, the group published an open letterto payment processors claiming to have
(03:57):
discovered hundreds of other games featuringrape, incest, and child sexual abuse on both
Steam and itch.io.
And as I said in my prior video, no one wantsto be seen as defending these things.
These are, quote, unquote, icky topics foranybody.
That is how censorship starts.
That's why I'm making this video and the videolike it beforehand because this is very
important to me, and I think it should beimportant to anybody that wants to experience
(04:18):
media, books, videos, video games, television,movies, whatever you wanna think of it as, in a
way that goes without censorship bycorporations like Mastercard and Visa.
And they request payment processors demonstratecorporate social responsibility.
This is Collective Shout speaking now, andimmediately cease processing payments on Steam
and itch.
After Steam altered its rules, Collective Shoutclaimed credit for the change, stating that
(04:41):
more than a thousand of its supporters hadcalled or emailed payment processors to make
their demands.
Now like many other online retailers, Steam andItch rely on payment processors to enable users
to make purchases on their platforms.
As such, these companies hold considerablepower and can influence what products
regardless of their legality, and that's thesuper important part here, are bought, sold, or
(05:01):
published.
Right?
Regardless of their legality.
That's what you need to take away from thisvideo if nothing else is that we aren't
specifically talking about things that yourgovernment or mine has determined are
unacceptable experience.
We're talking about the things that the societyhas allowed that now Visa and Mastercard and
whoever's running them on any given day havedetermined or beyond the pale for them to move
(05:25):
money between one bank and another order foryou to purchase that good from the good
provider that wants to sell it to you andlegally so.
This article continues for more of the summary,but I wanted to give that 30,000 foot overview
because as we talked about in our prior video,I think this is patently unacceptable for any
western democracy to allow for these kind ofcorporations to get in the way of what is
(05:50):
freedom of expression both on the sell side andthe purchasing side.
And in the interim between that video and thisone, Mastercard also felt it necessary to talk
about this a bit.
So they put out a statement on their socialmedia platforms that says clarifying recent
headlines on gaming content.
Mastercard has not evaluated any game orrequired restrictions of any activity on game
(06:15):
creator sites and platforms contrary to mediareports and allegations.
Our payment network follows standards based onthe rule of law.
Put simply, we allow all lawful purchases onour network.
At the same time, we require merchants to haveappropriate controls to ensure Mastercard cards
cannot be used for unlawful purchases,including illegal adult content.
(06:37):
Now there's a lot there.
We're gonna unpack it.
That's what the purpose of this video is.
But suffice it to say, the very first thing Iwould note here as a corporate lawyer is that
no one should read this and assume thatMastercard or companies that make statements
like this are lying.
These companies don't lie on their face.
They don't say something that is patentlyuntrue because their lawyers in general won't
(06:59):
allow it.
Now there are exceptions to every rule justlike this one, but for the most part, you can
rest assured when you read a statement likethis that this is not a lie insofar as it is
specifically making a false statement.
In fact, it's more of a technical omission.
You can read between the lines.
We're gonna talk about that process as part ofthis conversation.
But the way I talk about it to my clients andto my friends and family is to think of the
(07:23):
cookie jar.
Right?
If you've got a toddler or a youngster in yourhouse and there are mysteriously missing
cookies and they say and you go to them and yousay, alright.
Did you take a cookie out of the cookie jar?
And they say, no.
Absolutely not.
I would never put my hand in the cookie jar.
Then you look at that statement and you say,alright.
Did you tip over the cookie jar and take thecookies off the counter?
(07:45):
And they might well tell you the truth at thatpoint.
But you can see the difference between a actuallie and a technical lie whenever you talk to
any toddlers or young people in your life.
This is the way you should treat corporatestatements.
Remember the cookie jar.
Think of the fact that you can tell a lot oftechnical truths without telling the complete
and absolute truth, and that for the most part,the law can't do much about it in those
(08:09):
specific situations because we don't want tooutlaw any possible kind of omission or elision
of what the truth behind what you're askingabout actually is because we don't want the
governments of the world to be in theirpolicing speech, which is exactly what this
topic is entirely about in the first instance.
So remember the cookie jar.
(08:29):
But if we remember the cookie jar when we readthis, we'll note a couple of things.
One, that Mastercard only really says that wedidn't specifically go in and evaluate the
games that are available on Itch or on Steam.
Right?
And no right thinking person would expect thisabsolutely huge multinational corporation to go
in and check out the incest games on Steam todetermine whether or not they were something
(08:53):
they wanted their brand associated with.
No.
That's not how this works.
So they really didn't say anything in the firstpart of this statement.
Then the second part is a little bit closer tomaybe the lie line as we will see in a minute,
but still doesn't actually say what they wantyou to read it as saying.
So they say our payment network followsstandards based on the rule of law.
Totally fine.
Totally fair.
We would expect any corporation to basicallysay, at least in their documentation, that they
(09:18):
intend to follow the law.
I would note here as a lawyer that they don'tactually say that their network only requires
following the law or following the law of thejurisdiction in which the payments are being
processed, it says that we have standards whichare already not laws.
There's something else, the rules, theirpolicies, their procedures, and those don't
reflect the rule of law.
Those don't exactly follow the rule of law.
(09:40):
They are based on the rule of law.
Anyone that has ever watched a movie that isbased on their favorite book or real life story
knows that there's a lot of leeway between isthe actual story and what is based on that
story.
Right?
So the rule of law says, we don't like murder.
We don't like rape.
We don't like incest.
Those are actual laws in the variousjurisdictions.
(10:02):
We tend to take a different tact in governmentsthat have free expression on whether or not you
can actually include those things in yourfictionalized stories or other media content.
So you could still say we are outlawing alldepictions of murder, all depictions of rape,
all depictions of incest, and state prettytruthfully that that's based on concepts of the
(10:24):
law.
We are outlawing depictions of things that areotherwise outlawed, but it isn't actually
reflective of the rule of law because freedomof expression demands that we can allow
certainly artistic expressions, but maybe evennonartistic expressions of those things that
are otherwise illegal in the jurisdictionswe're talking about.
Now if that's all too complicated tounderstand, I don't blame you for that either.
(10:44):
This statement from a corporation is designedto be too complicated to understand.
It's designed to have you look at that sentenceand say, they mean they're following the law,
and say, okay.
Mostly, but not entirely.
Put simply, we allow all lawful purchases onour network.
Now this is interesting because they do allowthem because they really don't have another
choice but to allow them except that they canput pressure separate from the initial
(11:05):
allowance to say we don't want you to beworking with these particular purveyors of
goods any longer in the future.
But as it stands right this second, if they areon the storefront, we'll allow that purchase.
But you Steam, you itch.io, you should reallylook at what you're selling in the first place.
So they can say this statement that we'relooking at right now while still meaning
(11:26):
something else.
At the same time, we require merchants to haveappropriate controls to ensure Mastercard cards
cannot be used for unlawful purchases,including illegal adult content.
Now that makes all the sense in the world.
Right?
We just talked about the fact that we're gonnafollow the law if we're a multinational
corporation.
We're not going to lie in statements like this.
The lawyers won't let us.
And so all we are saying now is we didn'tevaluate any of the games separately.
(11:49):
Our network is based on the rule of law, and werequire our merchants to have controls that
mandate that they follow the rule of law orelse they can't use our card.
Who could object to any aspect of this?
However and there's always a however if we'rein virtual reality.
Right?
This gets reported on exactly the wayMastercard intended, but not with respect to
what they actually said.
(12:09):
As we can see here from the top line item, IGNhas a headline that says Mastercard denies it
pressured steam and inch.i0 to delist adultcontent.
We see similar headlines throughout the entiremedia complex here, so I don't wanna single out
IGN specifically for this other than to say allof these headlines are not doing the hard work
of reading the statements put out bycorporations like Mastercard while remembering
(12:32):
the cookie jar.
And I know I just talked to you about thecookie jar, but journalists should already be
trained in thinking about the cookie jar.
Right?
Corporations don't want the bad news to get outthere.
They don't want anything that reflectsnegatively on them.
In fact, that's part of what this story is allabout.
So you should go into any statement with a kindof adversarial positioning.
(12:53):
If you're a journalist or otherwise justsomebody that wants to get to the truth of the
matter, if you are a critical thinker and acritical reader, you wanna look at a statement
like Mastercard says and say, what are theysaying and what aren't they saying?
Going into the process specifically trying tosquash down your reading between the lines and
interpreting for Mastercard what it intendswhen you can only really take what it is that
(13:15):
they actually said for the truth of the matterasserted.
So if we look at this whole thing, we've got anentire video game journalism industry that just
takes on its face what Mastercard said as notbeing very responsive to what Valve and itch
dot were saying at the same time.
Now that gets a little bit more interestingwhen Kotaku goes out there with an article very
(13:38):
similar, and you saw it in the highlights thatwe just pointed out, that says Mastercard
denies pressuring Steam to censor not safe forwork games.
And they start this article by sayingMastercard released a statement on Friday
denying any responsibility for a new wave ofcensorship.
That is not what Mastercard did.
We just looked at the statement they made inits entirety.
What they said were a series of statements thatare somewhat adjacent to not being censorious,
(14:01):
but don't actually say Mastercard Mastercarddidn't play a part.
A a more realistic reading of this would say,okay.
You didn't evaluate the game separately, butyou certainly went through the vectors that you
had at your disposal, and you got a messagefrom Collective Shout or otherwise that says
they've they're selling stuff you wouldn't likeMastercard and said, okay.
Why don't you go see if that's in fact thecase, payment processors in our network, and
(14:22):
make sure that they aren't doing other thingsthat are illegal, and that came back with the
same effect.
But Kotaku doesn't wanna do that.
Kotaku just says, but to be clear, Mastercarddoesn't say it hasn't been involved at all.
A number of paragraphs in and certainly beyondthe headline that most people are going to
read, just that it's gone no further furtherthan enforcing its existing guidelines against
unlawful purchases, including illegal adultcontent.
(14:43):
And in fact, Mastercard didn't say that either.
They just said, we have these standards thatrequire our payment processor partners and the
merchants to follow the rules that we putforth, including rules against illegality.
But as we'll see in just a moment, those rulesextend past illegality.
In a statement to Kotaku, a spokesperson forValve said, oh, now we're getting into it real.
(15:04):
We've got the update from Kotaku here, and thisis where the actual story changes in its
entirety, and this gets reported on in variousother outlets after it happens.
But if you had been remembering the cookie jarand if you had read the statement with that in
mind, you would already know what Valve isabout to say, which is that while Mastercard
did not communicate with it directly, wewouldn't expect that from a company the size of
Mastercard against a video game seller,Concerns did come through payment processor and
(15:28):
banking intermediaries.
They said payment processors rejected Valve'scurrent guidelines for moderating illegal
content on Steam, citing Mastercard's rule fivetwelve seven, and we will see that in just a
minute.
Mastercard did not communicate with Valvedirectly.
Despite our request to do so, Valve statementsent over email to Kotaku reads, Mastercard
communicated with payment processors and theiracquiring banks.
(15:48):
If you pause here and say, Rick, didn't youjust tell me Mastercard is a payment processor?
They are, but they're also the operator of thenetwork of payment processors.
So when we are talking about this entiresubject matter, we're talking about Visa, we're
talking about Mastercard, we're talking aboutPayPal as payment gates, as payment processors,
and in the respective Mastercard and Visa, alsoas the operators of networks of payment
(16:09):
processors.
So this entire kind of global economicsituation is more complicated probably than it
needs to be, but certainly more complicatedthan most people are gonna spend the time
learning.
I don't blame you for that.
What's important here is that Steam and itch.i0call this entire group their payment processors
because from their perspective, that's all theyare.
We don't really need to get into thedifferences there because it doesn't matter for
purposes of our conversation.
(16:30):
They say payment processors communicated thiswith Valve, and we replied by outlining Steam's
policy since 2018 of attempting to distributegames that are legal for distribution.
Look, we have a requirement in our agreementwith our developers that says you're not gonna
put anything illegal on our site.
Payment processors say Valve rejected this andspecifically cited Mastercard's rule five
(16:51):
twelve seven and risk to the Mastercard brand.
More on that in just a minute.
Rule five dot 12 dot seven states, a merchantmust not submit to its acquirer, and this in
that case would mean the payment processorthat's closest to actually moving the money
between Valve and the purchaser, and a customermust not submit to the interchange system any
transaction that is illegal, sure, or and thisis where it gets a little bit controversial, In
(17:15):
the sole discretion of the corporation, that'sMastercard, may damage the goodwill of the
corporation or reflect negatively on the marks.
Now let's break this down in legalese for youjust a little bit here.
The corporation is Mastercard.
We talked about that.
Damaging the goodwill of the corporation means,alright, you say that you can accept Visa and
Mastercard on your website, and so there's acertain amount of our cache, our intellectual
(17:37):
property value that is now associated with theplatform in which you are selling something.
So we, in our license terms, can say you're notallowed to use the Mastercard name and in fact
our service if you are selling something thatmight damage our goodwill or reflect negatively
on the marks.
As a lawyer, this is not that on standard of aset of language.
(18:00):
Right?
If we're talking about licensing out yourintellectual property like the mark Mastercard
or the little picture of the circles or themark visa or what have you, then in general,
you have a vested interest in making sure thatisn't associated with very bad things that
could otherwise hurt the value you are tryingto put into your brand.
That's one of the reasons why in the priorvideo in virtual reality, I talk about the fact
(18:20):
that we wanna make clear that Visa andMastercard are not associated with what the
actual sales front is selling as much as theyare associated with the movement of money
properly, efficiently, and correctly betweenbuyer and seller.
And we wanna continue to make that clear if wecare about this situation and freedom of
expression because the only hook that they canhang their hat on is that if you see Mastercard
(18:45):
or Visa in that little payment box on Steam oron itch.io, then they have something to lose if
they if you are buying something personallythat they don't approve of.
And we wanna separate that out as much aspossible.
Now some people did come into the comments tothat video and point out that I believe it was
Visa had gotten a bad judgment against them forbeing responsible for certain payments that had
(19:07):
been made through their interprocessing system.
I think as a part of this conversation, wewanna make clear that there really shouldn't be
legal liability for that, and certainly not ifthey are otherwise acting as a common carrier
as we talked about in the earlier video.
They should only really take on liability forthe sales that are made through their inter
processing systems if they're willing to takeon liability for every sale everywhere, which
(19:30):
they certainly aren't.
And that could be another legal avenue to fightthis particular cause of censorship if we wound
up going down that road.
It goes on to say the sale of a product orservice including an image which is patently
offensive and lacks serious artistic value,such as by way of example and not limitation,
images of nonconsensual sexual behavior, sexualexploitation of a minor, nonconsensual
(19:51):
mutilation of a person or body part, andbestiality, or any other material that the
corporation deems unacceptable to sell inconnection with a mark would be a problem under
this particular rule.
Violations of the rule can cause major issues.
So what we've got here is that Mastercard sayswe didn't look at the game specifically, we
just enforce legality through our rules.
(20:12):
And then by Valve's statement and by the ruleitself, which we can look at here, excuse me,
for just a moment, we can see that theyactually do quite a bit more than just fight
illegality.
In fact, we look at rule five dot 12 dot seven,we see under the headline, it's illegal or
brand damaging transactions.
So just by the headline alone, before readingthe language here that we saw summarized in
(20:35):
Kotaku already, we know that it's more thanjust illegal transactions.
It has to be more else we wouldn't have toinclude a separate category in the headline.
It's brand damaging transactions as well.
So they say a merchant must not submit to itsacquirer and a customer must not submit to the
interchange system.
Any transaction that is illegal, really nothingcontroversial there, or in the sole discretion
of the corporation may damage the goodwill ofthe corporation or reflect negatively on the
(20:58):
marks.
And as we talked about before, that's wherethings get into trouble.
The corporation considers any of the followingactivities to be in violation of this rule.
The sale or offer of sale of a product orservice other than in full compliance with the
law, sure.
The sale of a product or service including animage which is patently offensive, obviously
and clearly offensive, and lacks seriousartistic value.
(21:18):
Now that's them trying to get around certain ofthe freedom of expression and freedom of speech
kind of concerns.
There are areas even in American law where yousay if something is just obscene and has no
artistic meaning, then maybe we can outlaw it.
Those are older precedents for the most part,but they are on the books.
Then we have the examples that Mastercardgives, such as by way of example and not
(21:39):
limitation, meaning that this is not anexhaustive list.
That's what it means legally is that this isjust examples and there could be more.
We're not telling you.
Images of nonconsensual sexual behavior, sexualexploitation of a minor, where video games
really getting into trouble, nonconsensualmutilation of a person or body part.
Can you even imagine how many video games havethe nonconsensual mutilation of a person or
(22:00):
body part?
I can't, and bestiality or any other materialthat the corporation deems unacceptable to sell
in connection with the market.
Now, actually, even though they give thatexample list and that seems to be what people
are reacting to, especially with respect tomutilation, that list is not exhaustive, and
the real problem is that the rest of thelanguage of this section talks about anything
else they deem unacceptable.
(22:22):
As we mentioned in our first video, this doesnot have to be limited to adult content at all.
What could the corporation deem unacceptable?
Maybe Mastercard just winds up hating blondesat some point.
Maybe Mastercard decides that what'sunacceptable to them is any notion of
republican policy or democratic policy or,heck, democracy itself.
(22:42):
If those are unacceptable, then Mastercard isreserving for its right the ability to cut off
your payments.
And since they are such a big corporation,since they and Visa are effectively a duopoly
in the payment processing realm, then this istremendously problematic for anybody that is
out there selling anything that is remotelyartistic in nature.
(23:03):
Right?
So they can come in and say, well, it doesn'thave artistic value, lack serious artistic
value.
That's already a legal weasel term that allowsthem to determine what serious artistic value
or not.
Patently offensive is just to them.
This is just them evaluating what's happeninghere.
And if Steam and Itch dot I o don't fight thisright now, there's really no limiting principle
(23:23):
that prevents Mastercard or any of the otherpayment processors from trying to enforce this
even more ruthlessly than it currently is.
Now you might also say, Rick, if that's trueand nobody can tell what it is they're talking
about here because the list is not exhaustive,it's anything that's offensive to them on any
given day, and anything else they might deemunacceptable to sell in connection with a mark
(23:44):
with no other legal parameters put around thatconcept at all, then how can anybody comply
with this?
And that's where you kind of get into Steam andItch and other folks even before this whole
thing broke out deciding on their own to takedraconian steps to push down on what is
probably protected speech, in various of thesejurisdictions because they don't wanna run
(24:08):
afoul of this line that they don't even knowwhere it is.
An acquirer that has been notified ofnoncompliance with this rule and that fails
promptly to cause the noncompliant process tocease or that has been notified multiple times
regarding violations of this rule is subject atthe acquirer's expense and in addition to any
other noncompliance assessment or otherdiscipline or both to any one or more of the
following.
So again, here the acquirer is a paymentprocessing unit of some kind that is closest to
(24:32):
Steam or the buyer, but primarily closest toSteam in connection with this particular
example.
And they are being told by Mastercard that,look, if you don't take appropriate steps to
make sure that you aren't facilitating the saleof things that we think are other illegal or
otherwise harmful to us, then we can do thesevarious things.
We can review your acquirer status.
(24:56):
We can audit you at your sole expense by anauditor selected by us, or we can put you on a
rule on the match pro system.
Otherwise, we can blacklist you as noncompliantwith what you're doing.
That's obviously a problem if you're otherwisein the payment processing business.
And so Mastercard is out there swinging itssword around and otherwise telling people what
(25:18):
to do on a premise that is no more specificthan what we just outlined in 5.
12 dot seven paragraph two.
Now there's actually two paragraph twos herethat's so that's not terribly easy to cite, but
this isn't the tightest piece of code aswritten law or rule here for Mastercard, which
is one of the reasons why the American CivilLiberties Union, the ACLU, said in a paragraph,
(25:39):
adult content is constitutionally protectedspeech under the first amendment.
As our complaint explains, Mastercard's vagueand ambiguous policy requirements coupled with
the dangerous combination of platformovercompliance, that steam and itch taking
things down that they might not even have totake down under the plausible deniability of
Mastercard saying, we didn't talk to youspecifically.
We talked to our payment processors, and thenthey're gonna enforce our rules as they see
(26:02):
fit.
So that overcompliance and inadequate automatedtools has led to the vast censorship of this
entirely lawful category of speech.
Say, okay.
The ACLU is on it, Rick.
So why do we have to do anything here?
Well, for one, this is an article from 2023.
This is a number of years ago and talks aboutMastercard putting this particular rule in
(26:22):
place back in 2021.
The other aspect of this that I wanted to pointout for y'all is you asked me about antitrust
laws.
You asked me about the Department of Justiceand Federal Trade Commission, and the ACLU
pursued this course of complaint with the FTC,the Federal Trade Commission.
And I will tell you right now as a lawyer, justlike I did in the prior video, that this
appears to be a losing type of argumentprimarily because the antitrust laws in The
(26:45):
United States are mostly concerned withmonopolistic behavior that is designed to
increase your monopoly power, is designed tokill competition or otherwise help you out in a
business sense.
And there's nothing here that anybody can pointto that suggests that Mastercard, Visa, PayPal,
or anyone else is out there trying to do thisby virtue of wanting to control their
(27:07):
marketplace more to to push down on competitorsand otherwise to increase their monopoly power.
So the antitrust laws are a pretty poor fit forthis, and I haven't seen any movement on the
complaint that the ACLU filed with the FTC in2023 that I could find.
But it wouldn't surprise me if the FTC being analready somewhat feckless body as we saw in
(27:27):
Microsoft versus Activision and in the numberof lawsuits they lost in the prior few years
already did not take up this particular requestto fight a multinational corporation like
Mastercard or certainly didn't take it up withany level of speediness.
And so the ACLU went out there with a perfectlyvalid complaint and a perfectly value valid
issue here, but probably did not direct theirattention, their force, their might, their
(27:52):
political power in the right direction.
So one of the things I wanna do with this videoin virtual reality and with the prior video in
virtual reality is to help you all think aboutwhat you can do if this is of concern to you.
Right?
So we did this in the prior video, But what youcan do here, I've divided into three kind of
broad categories, reading, writing, andarithmetic.
(28:13):
Because I find these little kind of easy waysto think about things helpful when I'm thinking
about them myself out in the field.
I wanna talk about reading first.
Remember the cookie jar.
Right?
Don't jump into assuming what you don'tactually read on these statements.
If you're a journalist, don't put headlinesthat suggest something is happening that isn't
fully happening.
(28:34):
Assume the corporations are at least lightlyadversarial to you in what they are
communicating and that you can only take on itsface exactly what they have put in the
statement before you.
Second, if you do that, you don't need me.
You don't need me to interpret these things foryou.
We all have minds that can critically thinkabout these things.
And if you go back to the Mastercard statement,you can read through each sentence, remembering
(28:55):
to read them independently and see, okay,they're trying to paint this picture that
they're not asking too much of these variousbodies, but what they're actually saying is we
didn't do anything directly.
We wouldn't have expected you to.
You did it indirectly.
That's what Valve admits in their statement toKotaku.
And while you say we only prevent things thatare illegal, we can tell that you are saying
that separate from the actual action that ishappening here with respect to Steam and
(29:18):
ish.io.
And if you read it that way and you understandthat you don't need me to make videos on this
because I certainly can't cover every aspect ofthis or any other topic really in the law and
business of video games or otherwise at thispoint in time, then you'll be well ahead of the
pace by the time Kotaku gets its statement fromValve.
You will look at those articles from IGN andother places and say that's not quite what
(29:39):
Mastercard said, and you will be betterinformed than a lot of your peers on these
particular topics.
Now before we get to writing, I do wannamention that other people have flagged for me.
There is a change.org petition going aroundabout this particular issue that says among
other things, we demand that Mastercard, Visa,and their pressure partners stop censoring
(30:00):
legal fictional content that complies with lawand platform standards, reject influence from
activist groups that promote moral panic ormisrepresent fiction as harm, be fully
transparent about content restrictions and therationale behind them, and four, protect
creators' rights to make legal adult contentand ensure a fair appeals process for any
penalized media.
Now I don't wanna tell anybody that's watchingthis video or listening to it as a podcast not
(30:23):
to do what you feel is necessary on things likethis.
You can sign this absolutely if you wannasupport something like this.
But I will tell you from a practicalperspective that unlike actually contacting
Visa or Mastercard directly, unlike the otherthings that we're gonna talk about in respect
of what you can do on this particular issue,this seems to me to be the most unlikely to
(30:45):
actually effect change here.
The reason Mastercard Mastercard makes astatement that we saw and we can analyze in
virtual reality is because they are feeling acertain amount of social pressure from corners
that are directly talking to them.
You can hear reports.
You can see reports all over the place thatpeople are calling Mastercard or calling Visa
and having these conversations with paymentprocessors across the globe, I think, all
(31:06):
honesty.
And that's gonna be more effective thaneffectively signing a a petition that says we
want you to stop doing this.
Right?
You're gonna need to hit them on their bottomline.
And in this particular case, their bottom lineis the social cost in engaging in this kind of
censorship.
I can't promise you that they're gonna changetheir ways, because you call them up and talk
(31:26):
about these things.
But what I can tell you is that the statementthat they make doesn't exist if they don't
think that there is some additional social costto what they had already anticipated when they
decided to take this course of action.
Now in terms of the writing step, you wannakeep that pressure on.
You wanna keep those phone calls coming.
You wanna keep those emails going.
You wanna keep this topic at the top of ourconversation of video games and technology in
(31:50):
general.
This is something we can't just sweep under therug.
We can't just forget about tomorrow as often asthat happens in social media and these other
spaces.
We need to keep our foot on the pedal and keepmaking sure that Mastercard, Visa, the payment
processors in general know that this isunacceptable and know that if they take this
step, they are going to be seen as plutarchs.
(32:12):
They are gonna seen as oligarchs that aretrying to control what people can buy, what
people can think, what people can see, and thatthat is not gonna work in a modern western
democracy in 2025 and beyond.
And so that at bare minimum, if they don'tchange their ways right now, the next time
something like this comes up, they are talkingin their boardrooms and they're thinking
(32:34):
through, alright, is this gonna have a socialcost to us?
Is this going to hurt our marks?
Right?
Ostensibly, if what we are concerned aboutabout is the value of our intellectual
property, if we're gonna take a step thatactually hurts the value of that intellectual
property, that's something we shouldn't do.
Also, you wanna know what's effective from whatis ineffective.
Right?
I just talked about the petition, that we sawearlier.
(32:57):
I I don't think that's an effective way to useyour time or energy.
I'm not gonna tell anybody not to do that, justthat it's not gonna be as useful as actually
taking the steps to put the pressure on Visa,Mastercard, and also to put the pressure on
Steam and itch.io.
They are the ones that are closest to thisparticular situation.
They are the ones that have the most money togain or to lose, and to help them understand
(33:17):
that if they yield on this particular score,Mastercard and Visa are the ones that actually
control their storefront, not them.
And if this continues on in that direction,they're not gonna control much of anything.
Now you can do that with keeping your moneyfrom them as we'll talk about in arithmetic.
You can talk you can do that by supportingothers that are their immediate competitors.
Right?
So I want you to keep encouraging the fight.
(33:38):
I want you to keep supporting the fighters.
The fighters here in this particular case areare good old games.
GOG and game publishers launchedfreedomtobuy.com or .games to raise awareness
on censorship in gaming.
They put out a number of games for free overthe last couple of days, many of which you
probably don't want in your libraries or toshow your mom or dad, but they're doing this to
(33:58):
fight that censorship.
And you're gonna wanna support those things ifyou care about this particular circumstance.
That those things will be seen.
The bottom line will be seen more than thepetition that says stop doing this.
And so I want folks to be focused on what it isthat they can do to encourage the fight, to
support the actual fighters that are engaged inthis.
(34:19):
Itch dot I o, I know, is also examining whetherthey can find other payment processors that
they can use outside of these networks that aretrying to censor what they make available.
You wanna support those initiatives, whetherit's with your words or with your dollars, if
you care about this particular topic.
And if you wanna continue caring about thisparticular topic and want me covering it more,
you can support channels like this one throughPatreon memberships and super chats on our
(34:39):
livestreams.
Just telling people that we're having theseconversations, telling your friends to come
check out these conversations, or as Imentioned at the top, leaving comments,
comments, and comments to this video becauseYouTube likes that and it's not gonna like a
lot of the terminology we used in thisconversation.
I wanted to get you in and out quick of thisepisode.
So thank you so much for joining me today, andI will catch you on the next VirtualEgality
(35:02):
where hopefully we're talking about something alittle less existential than whether or not we
can enjoy any media that we want without thepermission of Visa, Mastercard, and other
payment processors.
Virtual Legality is a YouTube video series withaudio podcast versions presented as commentary
and for education and entertainment purposesonly.
(35:24):
It does not constitute legal advice and doesnot create an attorney client relationship.
If you have legal questions about the topicsdiscussed, please consult your own legal
counsel.
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