FTC Probes Apple's in-app Purchases
By Simon Hamilton
The Federal Trade Commission has confirmed that it is investigating the controversial app marketing policies of Apple, but not because of their effect on content providers.
The agency is responding instead to a letter from Congressman Ed Markey expressing his apprehension that children in particular are being encouraged to make in-app iTunes purchases, billing their parents in the way. Many of the applications are free to download, but then they enable the provider to charge for products and services, as Apple takes a 30 percent cut.
Markey wrote, “I am concerned about how these applications are being promoted and delivered to consumers, particularly with respect to children, who are unlikely to understand the ramifications of in-app purchases.” Giving the example of one such case, he says, a parent was landed with a $1,000 bill for game accessories. Jon Leibowitz, the FTC chairman has now promised to probe the issue, saying he “fully shares” Markey’s concern.
In late 2009, Apple extended the ability to make in-app purchases to free apps. But with the feature available in childrens' games like the Smurfs’ Village and Tap Zoo, which are targeted at kids as young as four years old, many people worry that it’s just too easy for enthusiastic kids to generate hefty bills without realizing that these games cost a decent sum of money.
The app policies of Apple, and in particular its App Store subscriptions are already being investigated by both the FTC and the Justice Department, which are concerned that the market dominance of the technological giant gives it a little too much sway over its business partners.