Backlash Against In-app Sales Might Help Canada's Mobile Industry

Posted by Jacob Serebrin

The occasional public backlash against in-application sales won’t affect business, according to the head of app marketing company App Promo.

While the story of a Newfoundland woman, whose children spent over $3,000 in the iPad game Clash of Clans, drew nation-wide headlines late last month, Gary Yentin, CEO and founder of App Promo, says business in the mobile space shouldn’t be worried.

“It’s not going to change the industry,” says Yentin. “It’s the only way in this gaming space.

If anything, he says, “it’s a wakeup call for parents to take responsibility.”

While the British Government’s Office of Fair Trading is currently investigating in-app sales to children and may take action against them, Yentin doesn’t think it’s likely that will happen in Canada.

“In the United Kingdom, they’re taking a much stronger stance,” he says.

So far, the Canadian Competition Bureau, has refused to say whether they’re investigating any complaints related to mobile apps. But unlike the British Office of Fair Trading, which conducts studies and advises regulators, the Competition Bureau only enforces federal laws. 

In the United States, Apple is in the process of settling a $100 million lawsuit brought by parents whose children made in-app purchases without their knowledge. The claims in the suit are related to an iTunes store practice that kept users logged in for 15 minutes, allowing single click purchases by children. Two years ago, Apple implemented parental controls that when activated, require users to enter their password before making any purchases.

But in the Newfoundland case, the children knew their mother’s password and entered it numerous times in order to make purchases. 

Even so, Supercell, the maker of Clash of Clans, did issue a refund to the family. Supercell did not respond to requests for comment for this article.

For Yentin, that’s why it comes down to parental responsibility. He said these sorts of things won’t happen if parents monitor what their kids are playing.

And he thinks the highly publicized nature of these cases could help. “It’s good for the industry to raise awareness,” he says.

Even if Canada doesn’t introduce stricter regulations, Canadian app manufacturers who are targeting a US audience will have to deal with the Children's Online Privacy Protection Act (COPPA). Changes to the American law, which went into effect on July 1, set stricter conditions on the collection and usage of private information on users under 13, including a requirement that app makers receive parental consent to collect information.

According to Yentin, COPPA has already causing in-app sales to drop. But for Yentin there’s a bigger challenge facing mobile app startups: competition is becoming tougher.

With big players like Supercell investing heavily on monetization, “it’s hard for indie developers,” he says.

While some developers do get lucky, Yentin says it’s important for developers to remember that the “business of the game is almost more important than the development of the game.” And without a strong marketing plan, mobile app developers won’t succeed.

 

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Jacob Serebrin

Jacob Serebrin

Jacob Serebrin is a freelance reporter based in Montreal. He specializes in covering small business and the business of tech. His work has appeared in publications including The Globe and Mail and The Toronto Star. Having previously covered higher education and politics, he started covering business almost by accident, but talking to passionate people about interesting things soon had him... more



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