How to deal with the legal implications of your apps

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28 February, 2014

“Europe’s app economy is booming”, according to the European Commission in yesterday’s press release on consumer concerns with the application industry. The app industry employs over one million people and is expected to grow further within the next five years to an estimated worth of €63 billion. It is thus an important market for the European Union, one of which future growth should be stimulated. However, while the industry is growing, so do concerns regarding its legal implications. The app industry has been free to develop in the last few years, quite regardless of compliance with existing legislation or other concerns, but in recent months we see an increase in attention from regulators and enforcement authorities for this market.

The European Commission, for example, is currently addressing some concerns raised by consumers with regards to in-app purchases: while apps are often advertised as being “free of charge”, 50% of such apps work with in-app purchases.  According to European Commissioner for Consumer Policy Neven Mimica, hidden or unforeseen costs can harm consumer trust. Therefore, National enforcement authorities and the European Commission are discussing with industry how to address this issue which not only causes financial harm to consumers but can also put at stake the credibility of this very promising market.” According to Mimica, “consumers and in particular children need better protection against unexpected costs from in-app purchases.”

While the European Commission focuses on in-app purchases, a concern not unfounded for the most part but in my opinion maybe a little exaggerated on some points, the app-industry should realise that there are other, maybe even more important issues that can influence consumer trust in their products and services, such as privacy and security. We have previously addressed privacy and apps on this blog, with regards to the announcement by Data Protection and Privacy Commissioners at the Conference in Warsaw on measures to be taken regarding privacy compliance in apps, one of the possible measures being (increased) enforcement.

Consumer trust is crucial for growth and stability in the digital sector. It is thus important that app-developers are aware of the concerns consumers have with regards to their products, and of the consequences of these concerns for their business. Increased compliance with existing regulations, but also transparency and communication about the industry’s practices could proof to be valuable for increasing consumer trust and thus for the future of the app-market.

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Nathalie Falot

Senior Legal Consultant

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