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Credit for all of the following goes to Water Cooler Games. You could, of course, just have gone there yourself and read this, but it's a worthwhile story, and Watercooler is at times at an esoteric site, and this really should have gotten even more attention than it did.
Chapter One: Last month Reuters ran an article where they claimed that terrorist groups were making mods for games such as Battlefield 2, with the intention of recruiting gamers into terrorist cells. These alleged mods let you play as Arabs where the goal was to shoot and kill American soldiers. This startling revelation, claims Reuters, was revealed to the American House Permanent Select Committee on Intelligence by an intelligence contractor, who showed video of said mod.
Chapter Two: It is revealed that the video in question is not created by Al Quaeda, but instead is the work of a member of the PlanetBattlefield forums, and is not even in fact a mod, but is footage of the official BF2 expansion, Special Forces, with a voiceover by Team America World Police's Trey Stone. So it looks like someone is pretty stupid; Water Cooler Games blames Reuters.
Chapter Three: Reuters is cleared of charges of stupidity, though still guilty of a less than thorough investigation of the facts. The claim that the video was an Al Quaeda mod was not Reuters' interpretation of the facts, but that of the Defence intelligence contractor. Which is to say, top defence experts advising the American government at the highest level on this matter were unable to tell the difference between (a) terrorist recruiting material, and (b) an amateur parody video featuring footage from a popular commercial videogame. Put another way, the evidence that the American government is receiving of the existence and scope of terrorist activities provably consists of, in part, a domestic fan comedy.
Chapter Four: Water Cooler makes the transcripts of the hearing easily available.
Chapters Five and Six: Follow-up stories appear via Reuters and Nightline.
Water Cooler Games deserves a lot of acknowledgement for following this story; it's deeply disturbing. I can't think of a time when there's been such an obvious gap between legislators and a cultural group since the sixties. It's not that gamers and lawmakers don't see eye to eye - it's that there is so profound a lack of understanding as to be terrifying. I was going to make some sort of joke about the WMD evidence being screenshots of Command and Conquer but in retrospect I'm so profoundly unsettled by this that I'd rather not trivialise the issue. Take notice, gamers: they're not just marginalising us and treading on our rights - they're scared of us, and that's a much, much more dangerous thing.