EU to Apple: Why no spending reform for mobile games?

The European Commission has criticized Apple for not taking appropriate steps to curb in-app purchases in online and mobile games available on Apple devices. 

By , Staff Writer

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    A shopper walks by an Apple store in Peabody, Mass., June 9, 2014.
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The European Commission criticized Apple on Friday for failing to address the problem of in-app purchases made in online and mobile games. 

The problem is particularly acute, the Commission noted, when it comes to children unknowingly making in-app purchases while playing games. 

In response to a high number of consumer complaints in EU member countries, European national authorities began working with the European Commission to find solutions, according to an EU release

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"This is significant for consumers. In particular, children must be better protected when playing online," said EU Commissioner for Consumer Policy Neven Mimica, in the release.

Among the reforms being pushed by the Commission include omission of the word "free" from games that ultimately accrue costs for the user; an end to games that push children to buy items within the game that cost real money; and sufficient information provided to consumers prior to making purchases, which cannot be made through stored debit or credit card information "without consumers' explicit consent." 

"The Commission is very supportive of innovation in the app sector. In-app purchases are a legitimate business model, but it's essential for app-makers to understand and respect EU law while they develop these new business models," said European Commission Vice President Neelie Kroes, who is responsible for the Commission's Digital Agenda, in the release. 

The Commission pointed to Google, which owns the Android mobile operating system, as a positive example of reform for in-app purchasing. For example, the Commission notes, the word "free" will no longer appear anywhere in games sold by Google that contain in-app purchases. And it has altered the default settings of its apps to require that payments be authorized before each purchase. 

But Apple, which makes the iPhone, was singled out for what the Commission says is its failure to offer a coherent solution. 

"Regrettably, no concrete and immediate solutions have been made by Apple to date to address the concerns linked in particular to payment authorisation," the release states. While it adds that Apple has said it will address concerns linked to payment authorization, it notes that "no firm commitment and no timing have been provided for the implementation of such possible future changes." 

For its part, Apple says any app sold in its App Store that allows for in-app purchases has been sufficiently labeled for consumers. 

"Over the last year we made sure any app which enables customers to make in-app purchases is clearly marked," said an Apple spokesman. "We will continue to work with the EC member states to respond to their concerns."

Europe's large and growing app industry employs more than 1 million people and generates an annual revenue of around $13.53 billion, with 80 percent of that number coming from in-app purchases, according to Reuters, citing the European Commission. 

The business model of in-app purchases has caused a stir on American shores of late as well, with the Federal Trade Commission filing a lawsuit against online mega-retailer Amazon last week for generating millions of dollars in revenue through children making in-app purchases on apps sold in the Amazon Appstore that were then charged to their unknowing parents. The FTC settled a similar case against Apple in January with Apple agreeing to "refund to customers at least $32.5 million in unauthorized charges made by children and to change its billing practices to require consent from parents for in-app spending," according to Reuters.

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