Understanding Unity’s recent changes to its 'Terms of Services': Do they comply with law?

The entire video games industry has been buzzing with debates around Unity’s recently announced pricing adjustments. For those who might not be familiar, Unity is a leading toolset for developing videogames, comprising two main components: The Editor allows developers to create the game, whereas the software Runtime makes the game playable on different platforms and is installed alongside every game. 

What has changed?

Unity has recently modified its ‘Terms of Service’ (ToS) to include a “runtime fee” which is to become effective from 1 January 2024. This new fee will be charged for each game installation and is separate from the existing subscription costs for using Unity’s Editor. The change seems to be aimed at encouraging developers to opt for pricier subscription models. The fee calculation method and its focus on game “installs” leaded to a major backlash, especially since many modern games operate on “free-to-play” or “subscription” models, where the number of installs often doesn’t necessarily reflect the revenue and the possibility of misuse is also high. 

After the considerable backlash from the developer community, Unity revised its ToS. Although some uncertainties and the runtime fee remain, Unity has clarified its calculation methods and thresholds. The main question though still lingers: Is Unity allowed to just casually amend their ToS?

Legal grounds: Breach of trust or breach of law?

Two main sets of terms govern Unity’s relationship with developers: the Unity Terms of Services (UTS) and the Unity Editor Software Terms (ETS). Previously, the ETS contained a clause – now removed – allowing developers to adhere to earlier ToS versions if they refrained from updating the Editor. However, this was somewhat contradictory to the wider UTS, which (i) supersedes the ETS and (ii) stated that the only option when disagreeing with new terms was to stop using Unity’s services. 

The bottom line is that the ToS allowed Unity to make the latest changes in the first place. As regards the legality of such a move: It could be considered as a breach of trust rather than a breach of law. One legal nuance worth mentioning is the concept of “promissory estoppel” recognised under Californian law, which governs the ToS. In case of evidence that developers are relying heavily on the existing terms, the “promissory estoppel” could potentially limit Unity’s ability to change terms. 

Antitrust considerations

Unity’s possible market dominance, especially in the 3D mobile games market, also raises antitrust concerns under European Antitrust Law, which in general bans dominant companies from abusing their market position in order to impose unfair prices or trading conditions. If the amount of Unity’s new runtime fee is considered to be disproportionate to the economic value, they may be deemed abusive and a potential infringement of Antitrust Laws.  

What's next for developers?

In conclusion, while Unity’s changes to its ToS have left many developers disgruntled, they appear to be largely within the bounds of legal permissibility. For now, developers have three options:

• stick with Unity
• switch to another engine like Unreal or the open-source engine Godot, or
• invest in creating their own engine 

However, all of these choices come with challenges and benefits, such as teaching a new tool or investing into the development of a new tool.