Apple, Google, Amazon settle with Italian watchdog over in-app purchase worries

Four companies have agreed to make changes to the way 'freemium' apps are promoted and charged for in Italy.
Written by Federico Guerrini, Contributor

Apple, Google, Amazon, and French game developer Gameloft have reached an agreement with the Italian competition watchdog (Autorità Garante della Concorrenza e del Mercato, or AGCM, in Italian) to revise their policies on 'freemium' applications downloaded from their online stores.

Such apps, usually games, are free to download initially, but allow users to buy access to extra features using cash. According to AGCM, the way such apps are marketed is potentially misleading, especially to children, who may be more susceptible to advertisements and other forms of purchase stimulation than experienced users.

In the four companies' stores, freemium apps often come with a 'free' label attached, which could lead customers to believe they are downloading a free product, while in fact only the initial download and basic gaming experience come at no charge.

AGCM also had concerns over payment authorisation settings for such apps. While only a username and password are needed to install the app, once such credentials have been entered for the first time, all four companies' stores had a window of several minutes during which additional purchases could be made without the user authenticating them.

During this time, a user could potentially make in-app purchases without even realizing money is being deducted from their credit card.

The AGCM began investigating in-app purchases in Italy last May, following concerns raised by the European Commission about the app industry across Europe, and a complaint from Italian consumer association Altroconsumo about a specific game for mobile phones called Littlest Pet Shop.

The app pushed in-app purchases that allowed players to get ahead in the game and improve the wellbeing of their virtual 'pets'. Two virtual currencies called Bling and Kimble - which had to be bought with real-world cash - were used to access the optional features.

The complaint led AGCM to threaten the four companies with a €5m fine each if they didn't change how in-app purchases were made and promoted.

Since then, Apple and Google have already taken steps to avoid such action, by reducing the risk of confusion between free and freemium apps. In November, Apple changed the way the app-download buttons were labelled from 'free' to 'get', while in July, Google agreed to no longer use the word "free" at all for games that contain in-app purchases.

For its part, Amazon has struck a deal with AGCM to add an ad hoc caption that highlights the possibility of in-app purchases for some apps, near where they're labelled 'free'.

Apple and Google have also agreed to revise their payment authorisation processes, giving the customer the chance to decide whether they should have to reenter their credentials to authorise every download, or do without the extra authentication for a certain period of time after the first purchase.

Amazon already offers a "parental control system" which can be used to deactivate in-app purchases: under the new agreement with AGCM, the company has also formally committed to making this feature more visible.

The companies now have 60 days to implement any new changes they have agreed with the watchdog.

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