European Commission to investigate "freemium" apps

Several months after the ACCC announced its investigation into freemium apps that target children, the European Commission is launching its own inquiry.

After a barrage of consumer complaints, the European Commission (EC) has announced that it will be investigating apps that are free to download, but that contain in-app payments — especially in games that will target children.

According to the EC — the executive body of the European Union — over half the mobile games currently available in the EU are free downloads, and consumers, especially children, are not necessarily always aware of the costs that can be incurred.

EU justice commissioner and vice president of the EC, Viviane Reding, described the practice as "misleading". "Europe's app industry has enormous potential, both to generate jobs and growth, and to improve our daily lives through innovative technology," she said. "For the sector to deliver on its potential consumers must have confidence in new products. Misleading consumers is clearly the wrong business model and also goes against the spirit of EU rules on consumer protection. The European Commission will expect very concrete answers from the app industry to the concerns raised by citizens and national consumer organisations."

The EC met with industry leaders such as Apple and Google, as well as national enforcement authorities from across the EU, on 27 and 28 February 2014 to discuss how consumer protections may be applied. The four most important issues raised were: games that advertise themselves as free, thereby disguising the true costs involved with playing; games that contain direct exhortations to buy items, or tell a child to convince an adult to buy items; games that debit payments through default settings without the consumer's explicit consent every time; and developers that do not provide contact details.

Apple has already taken some steps towards minimising misleading apps or accidental purchases. A recent policy change for the app store means that, upon launch, all apps that contain in-app payments must clearly notify the customer of this. Additionally, each in-app payment needs to be verified in an official Apple pop-up notifying the customer of the exact amount and requiring confirmation to proceed.

Google Play, on the other hand, has no such requirements.

"Consumers and in particular children need better protection against unexpected costs from in-app purchases," said commissioner Neven Mimica. "National enforcement authorities and the European Commission are discussing with industry how to address this issue which not only causes financial harm to consumers but can also put at stake the credibility of this very promising market. Coming up with concrete solutions as soon as possible will be a win-win for all."

The EC's investigation follows a similar move by Australia's ACCC. The ACCC announced in September last year that it would be investigating the same practice after an ACCAN study found that freemium games were disproportionately targeting children.