Perhaps not surprisingly, Microsoft and Machinima have moved into damage control mode as news of a secret promotion to tout Xbox One on YouTube has become public. But you don't have to parse their public declarations too much to come to a simple conclusion: Microsoft simply wasn't aware that Machinima was paying video bloggers to promote Xbox One on YouTube.

In "Is Microsoft Paying Video Bloggers to Discuss Xbox One?," I reported that Microsoft had contracted with a marketing company called Machinima to promote the Xbox One. Leaked Machinima documents suggest that the company contacted influential video bloggers and paid them to promote Microsoft's console on YouTube. But virtually every mainstream and technology news agency reported this story, incorrectly, as Microsoft paying the bloggers.

Regardless of which firm was behind the scheme, it did raise two important issues. One, the video bloggers were allegedly asked to hide their affiliation with the marketing promotion. And two, by promoting a product and not revealing a paid relationship to do so, it's possible that the video bloggers and Machinima were violating FTC rules.

In a series of escalating statements, the two firms on Tuesday attempted to put this episode behind them by explaining what happened.

"This partnership between Machinima and Microsoft was a typical marketing partnership to promote Xbox One in December," a joint statement from the two firms note. "The Xbox team does not review any specific content or provide feedback on content. Any confidentiality provisions, terms, or other guidelines are standard documents provided by Machinima. For clarity, confidentiality relates to the agreements themselves, not the existence of the promotion."

In other words, Microsoft had nothing to do with how Machinima chose to market the Xbox One, and wasn't involved in—and didn't know about—the paying of video bloggers. And the confidentiality comment is a claim that Machinima was not trying to prevent video bloggers from disclosing the relationship. So why didn't the video bloggers reveal this relationship, as required by law?

When asked about this by The Wall Street Journal, Machinima offered a bit more information, suggesting that this was a simple mistake.

"[The inclusion of appropriate legal language in the contracts with video bloggers] didn't happen here and we're evaluating why," Machinima told the publication. "All participants are being asked today to include our standard language going forward. We apologize for the error and any confusion."

Neither party—not Machinima nor the video bloggers—needs to be aware of the law to break it, so Microsoft has requested that Machinima halts its promotion efforts and fix the videos that have already been posted.

"We have asked Machinima to not post any additional Xbox One content as part of this media buy, and we have asked them to add disclaimers to the videos that were part of this program indicating they were part of paid advertising," a Microsoft statement notes.