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Euro authorities lay down rules for in-app purchases - Apple isn't playing ball just yet
Euro authorities lay down rules for in-app purchases - Apple isn't playing ball just yet
July 18, 2014 | By Mike Rose

July 18, 2014 | By Mike Rose
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    29 comments
More: Console/PC, Smartphone/Tablet, Business/Marketing



The European Commission today released the findings of an investigation into in-app purchases in mobile and online games, stating that better protection is required for consumers, particularly children.

The EU is working alongside national authorities in a joint effort to make sure that games and apps with in-app purchases are marketed to consumers in an appropriate manner.

In particular, the EU says that it has communicated the following rules to Apple, Google, and other app store owners:

- Games advertised as "free" should not mislead consumers about the true costs involved

- Games should not contain direct exhortation to children to buy items in a game or to persuade an adult to buy items for them

- Consumers should be adequately informed about the payment arrangements for purchases and should not be debited through default settings without consumers' explicit consent

- Traders should provide an email address so that consumers can contact them in case of queries or complaints


As a direct result, Google has decided to make a number of changes to its Google Play store, and implementation is currently underway to fulfil these requirements. The company says it should be compliant by the end of September 2014.

However, the EU says that "no concrete and immediate solutions have been made by Apple to date to address the concerns linked in particular to payment authorisation."

The EU says that it will continue to engage with Apple, in the hope of making specific changes to its App Store in the near future.

Neelie Kroes, the vice president responsible for the Digital Agenda, noted, "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".

And Neven Mimica, EU Commissioner for Consumer Policy, added that, "In particular, children must be better protected when playing online. The action also provides invaluable experience for the ongoing reflection on how to most effectively organise the enforcement of consumer rights in the Union."

UK trade body TIGA commended the EU for this latest response, and added that it hopes EU and UK policy makers will secure a common global approach to in-app purchases.


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Comments


Paolo Gambardella
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what about Windows Phone?

Wendelin Reich
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From the press release: "Apple, Google and relevant trade associations were asked..."

Which sounds indeed like they didn't contact Microsoft.

Anders Larsson
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I am waiting for the general attack on gambling like mechanics in free to play games, whether on mobile or on PC... Dota 2 chests anyone?

Aaron Oostdijk
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The reason it's taken so long I think is likely because there's no direct way to take money back out of the system (except by reselling items outside of the Steam Wallet, which could very well be against the EULA, and is not part of Valve's practise in any case), and the chances of winning are communicated, consistent and not rigged (like some gambling machines actually are).

As far as I know, gambling mechanics are illegal here (NL) already, unless in a specifically sanctioned environment (Holland Casino).

Marcelo Careaga
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And why would those mechanics be under a general attack? Random reward mechanics are not new or unused even outside of the gaming industry. What makes these different?

Mark Velthuis
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@Marcelo Careaga

The difference is wether or not you have to pay specifically for this mechanic. There's random loot in many game like for example World of Warcraft. But you can't pay extra to get more chances. You paid, you got the game, it's a clear trade where both parties know what they get in advance.

When you pay for a chance of getting a certain item, the trade becomes unclear because the consumer doesnt know in advance what he or she will get, while the seller knows exactly what he or she will get, and may even be in full control of the trade.

@Wendelin
Gambling does not necesarily dictate that your winnings is in the same currency as the thing you bet. As long as it's not 100% clear what exact result your investment will get, it's gambling, even if every possible result is in your favor.

Wendelin Reich
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What do you mean by "gambling like mechanics in F2P games"? Gambling is about placing bets in some currency to be able to win in that currency. Not the same as random rewards, and not a common mechanic in F2P *games*.

Marcelo Careaga
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@Mark Velthuis

Well, if that's the definition we are going for, I have to wonder why there isn't a stink being raised already over, say, collectible football trading cards, for example. Or any collectible products where the pieces are sold on packs with a random element. Those are things that have been around forever and that are specifically and directly marketed to children. Why aren't they considered gambling?

My point is that there is a huge difference between gambling (bet money with the hope of winning more money) and gambling-like mechanics.

The argument that the outcomes or the probabilities are not clear to the user is more interesting, but it's also a double standard. Surprise prizes at the Country Fair, for putting a silly example, are also equally obscure.

Matt Robb
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Fairs are a cesspool of scammers and other con artists, heh.

I think you hit the nail on the head with "The argument that the outcomes or the probabilities are not clear to the user is more interesting" though. If you look at Magic: The Gathering for example, the number of cards of each rarity you get in a pack is published.

I've been playing SongPop lately with my family. My wife and I had a chuckle over their daily reward screen. It's a 3x3 grid with 9 different potential rewards. You get a free one each day and can pay for more "spins". So far every day we've gotten the "2 power ups" reward even though it implies an even chance of each reward based on how it's represented. Shady shady.

Jakub Kowalski
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"Games should not contain direct exhortation to children to buy items in a game or to persuade an adult to buy items for them"

That would mean banning every single f2p game out there, wouldn't it?

Mark Velthuis
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The way I understand it, it would merely mean they can not be advertised as F2P.

Even so, not every F2P game exhorts.

There's a line between "Here's a shop to buy stuff if you want" and "pay now or your smurfs will die a horrible death!"

Christian Kulenkampff
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The difference may be as subtle as:

"More likely to comply with the requirements"
At the end of the trial version, the consumer is informed that a full version is available to purchase but does not directly prompt, encourage or incite him/her to buy it:
‘Well done – you’ve finished the free game! A full version with 200 extra levels is available to purchase in the app store’.

"Less likely or unlikely to comply with the requirements"
Intermittently during gameplay, the game directly prompts, encourages or incties the consumer to buy or upgrade to the full version:
'Level 1 complete – well done! Get the full version of this game now! Click here to buy now from the app store’

See http://webarchive.nationalarchives.gov.uk/20140402142426/http://w
ww.oft.gov.uk/shared_oft/consumer-enforcement/oft1506a.pdf

SD Marlow
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Yeah, it seems like the F2P model only works when the total cost to play is obscured in some way, and only encountered in bits and pieces thru the equivalent of pop-up windows. Otherwise, the game would just have expansion packs or DLC listed in a menu and not technically follow the F2P model anymore.

Christian Kulenkampff
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This is a very delicate topic. In the EU direct advertising to children is forbidden. This means really that. If something is directly targeted to children is decided by the judges which is a very uncomfortable position for publishers and developers.

Just recently there was a lawsuit regarding the game "Runes of magic" in Germany, because Gameforge used youth language and addressed their customers informally to advertise their virtual items. Gameforge lost the case but initiated an appeal.

See http://www.reedsmith.com/German-Federal-Supreme-Court-Releases-Lo
ng-Awaited-Decision-in-Gameforge-Runes-of-Magic-Case-01-08-2014/

This UK report is also interesting in this regard: http://webarchive.nationalarchives.gov.uk/20140402142426/http://w
ww.oft.gov.uk/shared_oft/consumer-enforcement/oft1506.pdf
It's based on EU law so the principles apply probably to the whole EU.

Wendelin Reich
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I see this as good news, although these rules can only be a first step and aren't likely to have a big impact (except the one about 'direct exhortation', which however is gonna take years to tease out).

The key thing is that we start to see F2P cool-headedly as a matter of consumer protection, not just as an issue of morality or of game design.

When executed well, consumer protection policies increase transparency and thereby trust in a new business model. Right now, too many consumers (me included) approach F2P games with sense of cautiousness, fearing that they will be manipulated. The more consumers are given a chance to understand beforehand what kinds of costs a game migh created, the more likely they are to loose that fear, and the more they'll play.

Marcelo Careaga
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"too many consumers (me included) approach F2P games with sense of cautiousness, fearing that they will be manipulated"
I think that's true only of a very small subset of the market: Users that are willing to pay (which is already a small number) and that are either more knowledgeable or more resistant to change.
Most of the market is not particularly worried about F2P mechanics, they accept the fact that the games that are free come with gameplay limitations or other ways of getting money (like advertising) and when they are asked to pay they just take the decision based on the enjoyment they get from their experience (the perceived value of the transaction).

I agree that regulations about the promotion to the kid's market are a good idea because they are there too in other industries. Also, attacking the misleading advertising is important, but whatever regulation is there shouldn't be stronger than what is already in place for other industries.

Ian Griffiths
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I'm curious as to why you refer to 'morality' as opposed to 'ethics'.

Matt Robb
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Probably because a shady F2P developer scamming people is something he finds personally wrong, rather than something that is "against the rules".

Ian Griffiths
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When a parent walks into a toy store is it not full of direct exhortations to children to buy items or to persuade an adult to buy items for them? I think there is a real double standard here because the older generation simply don't see that there can be value in virtual, yet tangible, goods.

I'm not saying either is right, I just see this as complete hypocrisy that is targeting the folk devil of the moment.

Hakim Boukellif
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The purpose and expectations people have of stores are completely different from that of games. Besides, do kids spend an hour a day* reading toy store brochures/websites? If a kid asks his parents for a certain toy and they consent, would most parents just give him a credit card and say "know yourself out"?

* Kids still listen to Master Takahashi's advice, right?

Mitchell Fujino
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Have you looked at children's cartoons lately? They're almost completely hour-long ads for toys.

No argument on your second question though.

Matt Robb
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Virtually every cartoon with a toy line was created simply to advertise that toy line. This is often why the mainstream cartoons you see based on comic books are extremely simplified and tamed versions of the original source. They don't make money off the cartoons, it's just a marketing engine.

Christian Nutt
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Guessing the relevant distinction there is that when a parent takes a kid into a store they expect their kid to be in a marketplace; when they hand them their phone, they do not. You and I both know that this is outdated relative to the REALITY of the situation, but it will likely take some time before people adjust to this new reality (hell, if game developers who are WELL AWARE of it are kicking and screaming, how adjusted can consumers be?)

John Paduch
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Yeah, those first two seem vague to the point of being a nightmare in court. The 3rd and 4th, on the other hand, are more specific and frankly LONG overdue.

Robert Green
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In some cases they are likely to be hard to interpret, but for the first point there are some obvious exceptions. If you're ever played a game with interstitial ads, chances are you've seen a large number of games advertised as 'FREE'. Not 'free-to-play', not 'free-to-download', no fine print, just 'FREE'. Given how much the biggest companies in the mobile space rely on these adverts to keep bringing in new users, and then on those users to bring in other users, it wouldn't be hard to make the case that a significant portion of their revenue is in some way related to advertising that portrays a game as just being free.

Ben Newbon
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In the UK we already have OFT (office of fair trading) regulations regarding this stuff and especially in regards to children. However, it's a shame to see that a huge portion of the industry has still not made really any changes to their games to comply with the rules.

Unfortunately, there are so many games that the regulators will never be able to go through all of them to check their compliance but if authorities like the EU continue to pile on pressure, Apple and other games facilitators will have to start taking notice soon enough.

Gregory Booth
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Exploitation of purchases by minors aside none of us are responsible for our behavior, is this correct?

We all live in a Skinner Box right?

If someone plays a game, a *GAME*, knowing there is IAP, and purchases something it's the developer's, the platform holder's or someone else's fault for certain.

God knows no-one should bear any responsibility whatsoever for clicking "Purchase".

Ian Griffiths
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^This.

It's because this is an easier line to push when people express a general dislike for games. They always fall back on the idea that players aren't responsible for their own behaviour.

If you don't want an in-game item, don't buy it - simple.

Ramin Shokrizade
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This is a complicated subject. The key to a resolution where everyone wins, is clear and constructive communication. So far I have observed that Apple's strategy is to avoid communication entirely with regulators, perhaps hoping to delay a resolution. This gives the impression that Apple wishes to be above the law, and the interests of the consumers that regulators wish to protect. It seems to me that a large part of the success of Apple in this market is their focus on identifying the needs of consumers, and then meeting those needs. Their approach with F2P games is in direct opposition to their winning business model. Perhaps with their new non-Jobs leadership (we've been down this road before) they are again establishing themselves in a consumer-antagonistic posture.


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