New California law targets digital goods licensing

When you turn on your Xbox Series X, open the Microsoft Store, and buy Farming Simulator 22, you might think you own the game, but you’d be wrong. You actually paid for a license to play the game — not to own it. Companies can revoke the license at any time. It doesn’t happen all too often, but it does happen, especially with older games: Ubisoft made headlines earlier this year when delisted racing game The Crew in December, took its servers offline, then started to pull licenses to the game. Licensing vs. actually owning a game becomes an issue, once again, when you consider where your games go when you die — you can’t technically pass your license along to another person, per many companies’ policies.

A new California bill (AB 2426), signed into law by governor Gavin Newsom on Tuesday, is an attempt to bring transparency to the buying and selling of digital goods like movies, e-books, and, yes, video games. California assemblymember Jacqui Irwin introduced the bill, in part, after hearing about Ubisoft’s move with The Crew. The bill won’t change the fact that we’re all licensing games instead of actually owning them, but it will force companies that operate in California to be more transparent about it. Companies and storefronts that would have to comply include Microsoft with the Microsoft Store, Valve with Steam, Sony with the PlayStation Store, Nintendo with its eShop, and publishers with their own stores, like Ubisoft’s Ubisoft Store.

Polygon has reached out to all previously listed companies but did not hear back by publication time.

The law is expected to go into effect on Jan. 1, preventing companies that operate digital storefronts from using words like “purchase” or “buy” unless the company is clear that it’s selling licenses, not “unrestricted ownership interest in the digital good.” This notice will have to be “distinct and separate” from other terms and conditions of the purchase, according to the bill. The law doesn’t apply to subscription-based services, free downloads like demos, or companies that offer “permanent offline download[s]” of digital goods. Companies will be fined for breaking the rules.

“By sending AB 2426 to Governor Newsom, California is now the first state to recognize that when digital media retailers use terms like ‘buy’ and ‘purchase’ to advertise digital media licenses, they are engaged in false advertising,” University of Michigan professor Aaron Perzanowski said in a news release from Irwin. “Consumers around the world deserve to understand that when they spend money on digital movies, music, books, and games, those so-called ‘purchases’ can disappear without notice. There is still important work to do in securing consumers’ digital rights, but AB 2426 is a crucial step in the right direction.”

Digital purchasing is already ubiquitous, as physical media becomes less easy to find. Stores like Best Buy have stopped selling physical movies as a whole, and it wouldn’t be surprising to see more retailers follow. Physical video games use the disc as a license, and that disk is yours. But a company could still take servers offline, for instance — access still isn’t guaranteed.