Federal Trade Commission

Apple seemingly wasn’t too happy that it was singled out for an FTC investigation into making it too easy for children to make in-app purchases: following its own settlement back in January, the company’s general counsel Bruce Sewell promptly reported Google for the same thing, reports Politico.

“I thought this article might be of some interest, particularly if you have not already seen it,” Apple general counsel Bruce Sewell wrote to FTC Chairwoman Edith Ramirez and Democratic Commissioner Julie Brill, pointing to a report that criticized Google’s app store over the same issue of unauthorized purchases …

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Photo: edudemic.com

arsTechnica drew our attention to some unusually forthright comments from Apple’s lawyers on the subject of patent trolls, in a public FTC filing. Apple revealed that it had been the subject of 92 lawsuits by patent assertion entities over the course of the past three years, more than any other company.

Apple has rarely lost on the merits. But victory figures are small consolation, because in every one of these cases, Apple has been forced to bear its legal fees. This reality is the lifeblood of the patent assertion industry… Indeed, the opening line of many negotiations is some form of, “What we’re asking for is less than it will cost you to litigate this case to judgment.” It should come as no surprise, then, that despite its success in litigating the merits, for business purposes Apple has agreed to a settlement in 51 of the 57 closed cases.

Apple’s legal team used particularly direct language when referring to Lodsys, a company which claims to hold a patent on in-app purchases and which litigates against small developers who cannot afford the legal costs of fighting the case … 
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Apple CEO Tim Cook informed Apple employees today via email that the company has settled with the United States Federal Trade Commision over an in-app purchases dispute. Cook says that Apple and the FTC have been negotiating for “several months.” The issue in the App Store comes down to the controversies surrounding children spending money too easily in the App Store without the consent of their parents.

Cook notes that “protecting children” has been a priority for everyone at Apple, and Cook notes that the App Store has industry leading controls for security and privacy, making the need to deal with the FTC surprising. Cook’s email details the safeguards in place for the in-app purchase system. Cook also notes the great lengths that Apple went to in order to appease customers who may have been harmed by in-app purchases:

Last year, we set out to refund any in-app purchase which may have been made without a parent’s permission. We wanted to reach every customer who might have been affected, so we sent emails to 28 million App Store customers – anyone who had made an in-app purchase in a game designed for kids. When some emails bounced, we mailed the parents postcards. In all, we received 37,000 claims and we will be reimbursing each one as promised.

Cook also says that it doesn’t feel right that the FTC intervened here. Alas, a settlement has been reached:

It doesn’t feel right for the FTC to sue over a case that had already been settled. To us, it smacked of double jeopardy. However, the consent decree the FTC proposed does not require us to do anything we weren’t already going to do, so we decided to accept it rather than take on a long and distracting legal fight.

Here’s Cook’s email in full:

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The Federal Trade Commission released a report today that recommends how owners of mobile platforms can better inform consumers about how their data is being handled. The FTC named a number of companies in its report, including: Amazon, Apple, BlackBerry, Google, and Microsoft, as well as “application (app) developers, advertising networks and analytics companies, and app developer trade associations.”

The recommendations follow the FTC updating its online child privacy law to require parental consent before collecting data from children under the age of 13. It also came as Path agreed to pay an $800,000 settlement to the FTC forviolations of the Children’s Online Privacy Protections Act. Path posted a response to the FTC settlement on its website.

In the report, titled “Mobile Privacy Disclosures, Building Trust Through Transparency,” the FTC issued a number of recommendations. The FTC recommended that all platform owners “Provide just-in-time disclosures to consumers and obtain their affirmative express consent before allowing apps to access sensitive content like geolocation.” It recommended app developers take the same measures in addition to having “a privacy policy and make sure it is easily accessible through the app stores.” The report also suggested that companies implement a ” a one-stop “dashboard” into their operating systems so consumers can easily view how their data is being handled by specific apps.

Other recommendations the FTC asked Apple and others to implement include new icons that “depict the transmission of user data” and a “Do Not Track” option for users to easily opt out of their data being sent to third parties.

“FTC staff strongly encourages companies in the mobile ecosystem to work expeditiously to implement the recommendations in this report.  Doing so likely will result in enhancing the consumer trust that is so vital to companies operating in the mobile environment.  Moving forward, as the mobile landscape evolves, the FTC will continue to closely monitor developments in this space and consider additional ways it can help businesses effectively provide privacy information to consumers,” the report states.

A full list of the recommendations made by the FTC for mobile platform owners, advertising agencies, and app developers is below:
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In February, the story broke that Google and other advertising companies were bypassing iOS Safari’s privacy settings and continuing to track users without their consent. Google quickly disabled its code responsible for the tracking after a story from The Wall Street Journal published, and Apple then claimed it was “working to put a stop” to the issue.

Now, a new report from Mercury News claimed the U.S. Federal Trade Commission is considering whether to fine Google over the incident. The decision is expected in the next 30 days:

The Federal Trade Commission is deep into an investigation of Google’s actions in bypassing the default privacy settings of Apple’s (AAPL) Safari browser for Google users, according to sources familiar with ongoing negotiations between the company and the government… Within the next 30 days, the FTC could order the Mountain View search giant to pay an even larger fine in the Safari case than the penalty the Federal Communications Commission hit Google with Friday, say the sources, who spoke on condition of anonymity.

The report is referring to Google being recently fined $25,000 by the FCC after it allegedly “deliberately impeded and delayed” an investigation related to Street View cars. The heart of the Safari bypassing investigation is whether the company is violating a previous privacy agreement made with the FTC following controversy over the failed “Buzz” service. The report claimed Google could face up to $16,000 per violation per day for violating the agreement. Google said to Mercury News today it would “cooperate with any officials who have questions” and explained making its +1 compatible on mobile Safari created the issue:

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According to a report from Bloomberg (via AllThingsD), the U.S. Federal Trade Commission subpoenaed Apple as part of its antitrust investigation of Google. There are not many details currently, but the report claims the FTC is interested in Apple’s agreement with the company to use Google as its primary default search engine on iOS devices.

The agency’s request for documents includes the agreements that made Google the preferred search engine on Apple’s mobile devices, said the people, who weren’t authorized to speak publicly and declined to be identified. Google rivals such as Microsoft Corp. (MSFT) have criticized these agreements as anticompetitive.

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