In App Purchases: Italian authorities settle with platforms
There has been a Europe-wide discussion in recent years over how the 'freemium' business model and the use of in-app purchases, which has seen such success in mobile and online games, interacts with consumer law, chiefly the European Consumer Rights Directive. The investigation last year by the OFT, and the principles that they created as a result, were the UK-focused part of this debate. Read our quick guide to those principles.
This EU-wide discussion took an important step last week with the announcement by the Italian competition authority that they have reached a settlement with Apple, Google, Gameloft and Amazon over the use and communication of in-app purchases in apps and games.
There was ongoing cooperation between the Italian authorities and the European Commission during this investigation. As a result, what the platforms ahve agreed to do apply across the EU, including of course in the UK.
The changes are an about applying the existing Consumer Rights Directive to the platforms, just as the OFT principles (now enforced by the CMA) are guidance to help games companies ensure they are in line with the Directive. As such, UK games companies should not have to change any of their practices as a result of this new announcement. But it will affect (and already has) how your games are presented on these platforms.
Our colleagues in AESVI, the Italian games industry association, provided a summary of the settlement (much of which is already in place):
iTunes agreed to:
a) Stop using the word “gratis” (in English “free”) and replace or integrate it with the word “ottieni” (in English “get") to define apps that can be downloaded without the payment of an initial price, but still allow in-app purchases;
b) Expressly indicate that the app includes in-app payments and the range of prices;
c) Allow consumers to approve in-app purchases by entering a personal password at the time of the app’s first purchase or for purchases made within it;
d) Amend business contracts with developers operating in the European Union clearly forbidding the ones that encourage children to get in-app purchases to advance.
Google agreed to:
a) Stop using the word “free” for apps based on in-app purchases;
b) Provide consumers with more detailed information when downloading an app;
c) Allow consumers with a Google account to define their own settings for in-app purchases by providing them with a password.
Gameloft agreed to do the following for child related games:
a) Provide consumers with more detailed information, including a tutorial and an updated disclaimer;
b) Not to use invitations to purchase that could take advantage of consumers’ "emotional reactions";
Amazon agreed to:
a) Stop using the word “gratis”;
b) Introduce a parental control system in its online store;
c) Require their developers to comply with the EU regulation.