FTC Calls Out Apple And Google Over “Squeezing” Behaviors

What started as an order from the Federal Trade Commission to mobile ad platform, Tapjoy, to clean up their act, has now branched out into a larger expression of concern about the state of mobile gaming and its major platform holders: Apple and Google.

FTC Commissioner Rohit Chopra released an official statement regarding the order against Tapjoy, the result of a federal case against the company being settled. Tapjoy was accused of using their ad platform in a deceptive fashion. The platform was supposed to allow mobile developers to integrate ads into their games which subsequently offered rewards to players if they completed tasks like signing up for a subscription or purchased items. The FTC found that Tapjoy’s platform allowed for those rewards not to be delivered to players, as well as failing to share the ad revenue with the game developers. Such activities are a violation of the FTC Act’s prohibitions on unfair and deceptive practices.

Yet while Tapjoy was the primary focus of the statement, Commissioner Chopra (along with Commissioner Rebecca Kelly Slaughter) observed that Tapjoy’s actions seemed to be a symptom of a much larger problem.  They pointed to Apple and Google as being the proximate source of the issues the FTC has been dealing with, not only with Tapjoy, but other companies as well.

“We should all be concerned that gatekeepers can harm developers and squelch innovation. The clearest example is rent extraction: Apple and Google charge mobile app developers on their platforms up to 30 percent of sales, and even bar developers from trying to avoid this tax through offering alternative payment systems,” Chopra wrote, a clear reference to the ongoing Apple v. Epic lawsuit. “This market structure also has cascading effects on gamers and consumers. Under heavy taxation by Apple and Google, developers have been forced to adopt alternative monetization models that rely on surveillance, manipulation, and other harmful practices.”

Chopra concluded the statement, writing, “The settlement proposed today should help reverse the lax policing practices that led hundreds of thousands of gamers to file complaints. But when it comes to addressing the deeper structural problems in this marketplace that threaten both gamers and developers, the Commission will need to use all of its tools – competition, consumer protection, and data protection – to combat middlemen mischief, including by the largest gaming gatekeepers.”

Food For Thought

If they weren’t before, Apple and Google now seem to be very firmly on the FTC’s radar. And while it’s unlikely that anything will be happening in the short term, there’s nothing specifically stopping the FTC from filing their own anti-trust suits against both companies. The smart move would be to wait until the outcome of Apple v. Epic and Google v. Epic, so that the FTC can examine the arguments the litigants are using. But right now, there may be some nervous executives in Cupertino and Mountain View.

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