Italian Regulators Investigating Apple and Others Over 'Freemium' App Pricing Model

[MacRumors]

The Wall Street Journal reports that Italy's Antitrust and Competition Authority has launched an investigation to determine whether internet companies such as Apple, Google, and Amazon mislead people by offering in-app purchases for titles that are listed as free downloads.

Consumers could be led to think, contrary to reality, that a game is completely free and therefore they don't know ahead of time the game's true cost," the regulator said in a statement. "It appears also that there is a lack of information regarding how to exclude or limit the possibility of making a purchase inside the app.

The news comes as Apple has been the target of multiple complaints from consumers and regulatory agencies over in-app purchases in recent years. After multiple parental complaints were filed with the FTC in 2011, Apple came to a settlement in January which saw the company provide $32 million in refunds to parents whose children purchased unauthorized in-app items.

Apple has also implemented a number of changes to its in-app purchase policies, including requiring a separate passcode entry for initiating in-app purchases, providing multiple notifications before a purchase is made, and obtaining express consent from consumers before billing them for an in-app purchase. The company has also displayed "Offers In-App Purchases" disclosure on individual app detail pages and inserted small "In-App Purchases" notifications for apps in Top Charts listings and elsewhere.

If found at fault, Apple could receive a maximum fine of EUR5 million, or approximately $6.8 million. Italian regulators previously fined Apple $1.2 million in late 2011 and another $260,000 in late 2012 over AppleCare practices, stating that the company was not providing customers with sufficient information about the two years of the free product warranty required under Italian law. As a result of this, Apple added an online statement on warranty disclosures to its customers in Italy.


Article Link: Italian Regulators Investigating Apple and Others Over 'Freemium' App Pricing Model

 

[Danthetechman]

Yes, because every free app relies fully on in-app purchases to progress throughout the game, that without which, the game could not possibly be completed.
not...

 

[ValSalva]

The EU is not exactly fond of Apple, regardless of the merit of this investigation

 

[Silly John Fatty]

Yes, because every free app relies fully on in-app purchases to progress throughout the game, that without which, the game could not possibly be completed.
not...

Yeah there's quite some games that work this way. You have to kill a zombie. In order to kill that Zombie, you must use a special weapon, because otherwise you won't be able to beat it. To get the weapon, you need 5000 coins. To get 5000 coins you've gotta pay €1,49 or play 9947462920184 matches.
But to be honest, it makes the longevity of the game longer…

I'm not really a game player, but I do have some games for here and there in between work sometimes. I had this one called Ski Safari. Very cool game, but it made me an addict at some point. Sadly I bought everything I could at some point, which ruined the game for me. The thing that sucked: I deleted the game after that (because I no longer played it), without knowing I would also loose everything I had won and bought before when I would reinstall it on the iPhone the next time I guess this was a lesson for me haha!

The EU is not exactly fond of Apple, regardless of the merit of this investigation

They are not and they are right not to be; Apple does so many things that are wrong on so many levels.

 

[fredaroony]

The EU is not exactly fond of Apple, regardless of the merit of this investigation

When Apple keep ignoring the laws of other countries it tends to piss them off...

 

[The Mad Hatter]

I'm just trying to figure why this is Apple's fault? They are just the store/distributor, not the makers of the app/game. However, Apple SHOULD reign in some of these 'freemium' apps, as they are just getting out of hand.

 

[rmatthewware]

I'm sure there's a dry riverbed somewhere, perhaps Italy could use their tears to fill it?

 

[Xenc]

I'm sure there's a dry riverbed somewhere, perhaps Italy could use their tears to fill it?

Like a lot of what the EU does with new technologies, the Italian government is attempting to make pricing clearer and ultimately protect us, the consumer. That can only be good in the long run!

 

[Parasprite]

I'm just trying to figure why this is Apple's fault? They are just the store/distributor, not the makers of the app/game. However, Apple SHOULD reign in some of these 'freemium' apps, as they are just getting out of hand.

You just answered your own question.

Apple SHOULD reign in some of these 'freemium' apps, as they are just getting out of hand.

 

[inscrewtable]

I do not make use of any apps that require continuous payment however as part of my work I have made myself aware if their existence and while I understand that this is what some people freely choose to do, to me it is a blight that taints the app industry with a greed that targets the weakness and lack of knowledge of younger persons. Not unlike the porno industry free websites.

I understand that Apple is now owned by investors and has sold its soul and its sole voice of reason SJ is brown bread. So nothing is going to change but it must be said that the path Apple has embarked upon with an ever growing portfolio of gadgets, consumer nick nacks, and other purely moneymaking ventures with zero redeeming value to humanity is going to gradually tarnish the truely marvelous improvements to the quality of life thus far attained.

Tim Cook really does need to take stock of Apple and ask himself the question in his heart of hearts "what direction would Steve wish to steer the company". Of course this will not and probably cannot happen.

 

[Silly John Fatty]

Like a lot of what the EU does with new technologies, the Italian government is attempting to make pricing clearer and ultimately protect us, the consumer. That can only be good in the long run!

I agree!
To me that sounded more like rmatthewware was offended, but I'm sure there's a dry riverbed somewhere, perhaps rmatthewware could use his tears to fill it?

 

[britboyj]

Apple clearly lists when apps have in-app purchases available on the product pages. You can't expect them to police game design choices.

 

[Analog Kid]

While I hate freemium with a deep, seething, passion, I can't see an argument that it's illegal-- at least according to what's quoted in this story.

Being "tricked" into downloading something that's free and easily deleted doesn't strike me as harmful. The language quoted suggests that people don't know they're unaware they're making in-app purchases, which certainly isn't the case in my version of iOS-- I need to enter my AppStore password.

This strikes me a bit like trying to protect people from themselves. I think it's up to consumers to choose not to buy this garbage, and to let Apple know that they think such junk tarnishes the ease-of-use of the AppStore.

I hate freemium and I think it undermines my user experience in the AppStore, but as long as it keeps making as much money as it does and people keep paying $100 in increments for a game I'd pay $10 for upfront, I'm going to lose this argument-- and that's just how it is.

 

[lk400]

While I hate freemium with a deep, seething, passion, I can't see an argument that it's illegal-- at least according to what's quoted in this story.

Being "tricked" into downloading something that's free and easily deleted doesn't strike me as harmful. The language quoted suggests that people don't know they're unaware they're making in-app purchases, which certainly isn't the case in my version of iOS-- I need to enter my AppStore password.

This strikes me a bit like trying to protect people from themselves. I think it's up to consumers to choose not to buy this garbage, and to let Apple know that they think such junk tarnishes the ease-of-use of the AppStore.

I hate freemium and I think it undermines my user experience in the AppStore, but as long as it keeps making as much money as it does and people keep paying $100 in increments for a game I'd pay $10 for upfront, I'm going to lose this argument-- and that's just how it is.

Being illegal doesn't require it to be "harmful" or anything like that, just that there is a law, and what apple and others are doing is not in line with that.

 

[Analog Kid]

Tim Cook really does need to take stock of Apple and ask himself the question in his heart of hearts "what direction would Steve wish to steer the company". Of course this will not and probably cannot happen.

No he shouldn't. It's a company, not a religion. Tim Cook should make decisions based on his own wisdom, much of which is based on his experience having worked with Jobs and seeing what made Apple successful, not based on speculation about what someone else would have done. If enough people think he didn't learn the right lessons, he should be replaced.

There's also a suggestion in your comment that you have a better understanding of Jobs from watching a few keynotes and maybe reading a book, than Cook does after working side by side with Jobs for more than a decade. By all accounts, Jobs left Cook in charge-- which should tell you the direction in which he wished to steer the company.

----------

Being illegal doesn't require it to be "harmful" or anything like that, just that there is a law, and what apple and others are doing is not in line with that.

My first statement is that I don't get the sense there's a law that's being broken, and after that I was expressing my opinion that there shouldn't be a law written.

As I said before, I haven't studied this case deeper than the article, so maybe there's a "can't get people to download something for free and then ask them to pay a little bit more" law in Italy, but as it's written it looks like they're implying something close to what I'd understand as "fraud"-- and I don't agree.

 

[inscrewtable]

There's also a suggestion in your comment that you have a better understanding of Jobs from watching a few keynotes and maybe reading a book

It is clear to me from following the often stumbling and occasionally ramshackle rise of Apple to the Godzilla proportions that it now commands, that SJ, genuinely had a love for the best things about humanity, as exemplified by his appreciation of bringing quality fonts to computers. Also in the Mac OS from pre X to post X, and subsequent hardware that there was a palpable desire to genuinely do things that really do make the world a better place.

I'm just saying that it appears to me that people who only care about how much money they can make, have now subjugated this desire to make the world a better place. Apple will still do good things but it will be more a side benefit than a driving force. I guess it's inevitable and probably SJ would not have been able to change it anyway.

Back on topic, the right thing to do would be for Apple to completely ban the freemium model and have developers set a price for their product and market it with a one time charge. Perhaps they could have more expensive and less expensive versions, but resorting to trickery to grow revenue may be legal but it's certainly immoral. This is the sort of leadership that being a responsible corporate megalith, would entail.

 

[hansonjohn590]

I thought it was against Apples rules to put something like this in the store already? They being said, I have no problem with them raising the bar on something like this.

DLC is truly one of the most abused things by developers.

 

[mojolicious]

there was a palpable desire to genuinely do things that really do make the world a better place

Sounds plausibly messianic.

 

[FlatlinerG]

So wait, people are dumb so blame Apple? That's like investigating car companies because people didn't realize they couldn't waltz out onto the highway..

 

[kurosov]

This is ridiculous.

If the initial "cost" is nothing then you didn't buy it. So if after acquiring an app you find out you need to make an in app purchase to play and you don't wish to do so then just delete the bloody app and move on. You don't lose out on anything.

In fact I've always preffered games that offer just one app that's free and let's you play the first level then requires you to make an in app purchase to unlock the rest. Its a much cleaner solution than the whole "lite" app version that means you end up with 2 versions of an app associated with your account should you chose to buy the full version.

I'm all for consumer protection but this is just asinine stupidity.

 

[Gubbz]

This sounds like another Italian way to make up for some of their debt. Of course I can't speak for all Freemium apps, but the ones I play you don't have to spend $$$, yes, you could purchase the short-track or you can slog it out with effort, the key thing is you don't have to.

If and this is a big IF, you do 'have to' spend money to advance, unlock etc, then Apple etc need to open up a 'Demo' category.

 

[proline]

The EU is not exactly fond of Apple, regardless of the merit of this investigation

It's not personal. The EU just isn't a good place to innovate or do business, period. There is a reason why there is no European equivalent of Apple, MS, Google, Facebook, Tesla, SpaceX, etc. and never will be.

 

[Klae17]

I do not make use of any apps that require continuous payment however as part of my work I have made myself aware if their existence and while I understand that this is what some people freely choose to do, to me it is a blight that taints the app industry with a greed that targets the weakness and lack of knowledge of younger persons. Not unlike the porno industry free websites.

I understand that Apple is now owned by investors and has sold its soul and its sole voice of reason SJ is brown bread. So nothing is going to change but it must be said that the path Apple has embarked upon with an ever growing portfolio of gadgets, consumer nick nacks, and other purely moneymaking ventures with zero redeeming value to humanity is going to gradually tarnish the truely marvelous improvements to the quality of life thus far attained.

Tim Cook really does need to take stock of Apple and ask himself the question in his heart of hearts "what direction would Steve wish to steer the company". Of course this will not and probably cannot happen.

1. Steve did tell Tim how to steer it years before he died.

2. Steve is no longer alive.

3. Steve started the portfolio of gadgets, consumer nick nacks, and other purely moneymaking ventures with zero redeeming value to humanity.

4. Tim has done a lot for humanity and charity while Steve refused to.

 

[The Doctor11]

The app is free you have it don't you? And it clearly says in all purchases before you click on it and right near the free install button

 

[iolinux333]

Fifty years of laws to protect the stupid, who thank us by reproducing even more stupid.