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FTC targets Grand Theft Auto maker

Regulators focus on explicit video tucked in software

The publisher of the popular computer game Grand Theft Auto: San Andreas said yesterday it is the subject of a federal investigation because of a sexually explicit video hidden inside the software.

Take-Two Interactive Software Inc. revealed the investigation one day after the House of Representatives voted to urge the Federal Trade Commission to take action. ''The company intends to fully cooperate with the FTC inquiry, and believes that it acted in accordance with all applicable laws and regulations," said a statement issued by Take-Two.

Since its release last year, San Andreas has become one of the most popular computer games ever published, but it has been denounced for glorifying brutality and criminal behavior. Earlier this month, Dutch computer hobbyist Patrick Wildenborg said the game also featured explicit sex. Wildenborg and his friends wrote a program called ''Hot Coffee," which unlocked a sexually explicit video hidden inside the version of the game written for desktop computers. Officials of Take-Two refused to confirm or deny the existence of the video, and blamed Wildenborg for modifying the game. Soon thereafter, another computer gamer found a way to unlock the same sex scenes on the version of San Andreas produced for the Sony PlayStation 2 video game machine.

The claims of hidden pornography in the game worried officials at the Entertainment Software Ratings Board, which issues age-appropriate ratings for computer games. The board had given San Andreas its mature rating, meaning the game was appropriate for players age 17 or older. But after a new investigation, the board changed San Andreas' rating to adults only -- suitable for players 18 or older.

While the nation's biggest retailers will sell mature-rated games, nearly all of them refuse to stock adults-only titles. After the ratings change was revealed last week, retailers such as Wal-Mart, Best Buy, and GameStop immediately pulled San Andreas from store shelves. The company, which had been expected to post a loss of 6 cents per share for its third quarter ending in July, said that it would instead lose 40 to 45 cents a share due to lost sales and a need to set aside money to buy back copies of the game. And Take-Two's stock, which had traded as high as $29.34 in mid-June, closed on Tuesday at $23.59, down $1.84 for the day on the Nasdaq Stock Market.

Meanwhile, members of Congress, including Democratic Senator Hillary Rodham Clinton of New York, questioned whether Take-Two had tried to smuggle explicit sexual content past the ratings board to avoid an adults-only rating.

Lawmakers want the FTC to determine whether Take-Two's actions amounted to deceptive advertising. The ratings board declined to comment on the FTC investigation.

According to David Kinney, a game industry critic and owner of an alternative rating service, Take-Two shouldn't be the only company under investigation. ''There will be more to come because there are more video games out there have hidden codes in them that are sexually oriented," said Kinney, the founder of PSVratings Data Corp. in Los Angeles.

Hiawatha Bray can be reached at bray@globe.com.

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