I recently wrote an article on the investigation by the UK telecoms regulator of mobile phone contracts, only a day later it was publicised that the Office of Fair Trading (OFT) is going to be looking at free web and phone games aimed at children and that charge for extras through in game purchases.
I have also written on this topic in the recent past after one of the well publicised events where a child ran up a significant bill on their parent’s credit card. In the B2C space where often regulators are in place we are seeing increasing activity reviewing new business models against existing regulations. In the case of the OFT review they will be looking at whether the games put undue pressure on children to pay for additional content and whether they are “misleading, commercially aggressive or otherwise unfair“.
The aim is to look into whether these games include ‘direct exhortations’ to children – a strong encouragement to make a purchase, or to do something that will necessitate making a purchase, or to persuade their parents or other adults to make a purchase for them. This is unlawful under existing UK regulations.
I’m sure many among us will experience of the so called ‘free app’ where it has clearly been designed to clearly require some form of in app purchase to maintain full usage and therefore it is easy to see that they have been designed to act in such a way as to incentivise you to purchase even if it isn’t strictly required.
This isn’t that unsurprising when you consider that app makers are businesses and need to monetize their investments. What it does highlight is that, during business model generation, there is a need to balance: the design for monetization; with the existing regulatory frameworks, which in all likelihood may have been written for past types of business models.
Compounding this the market for apps is global and therefore it isn’t just one jurisdiction that will have to be considered. Also the apps have to be considered in the context of multiple host operating systems which increasingly handle the access/security/payment protocols. So you have a multi-dimensional system that needs to be considered.
It’s good to see that a number of regulators are active in reviewing new business models in order to find and hopefully articulate the boundaries.
In the case of the various reviews it will be interesting to see where the acceptable balance is set between individual responsibility, and the responsibility of the seller.