Mobile advertising company Tapjoy has tied up with the US Federal Trade Commission over allegations that it was misleading consumers about the misleading rewards they could earn in mobile games. According to the FTC, Tapoy deceived consumers who took part in various activities – such as buying a product, signing up for a free trial, providing their personal information, such as an email address, or completing a survey – in – Game virtual currency exchange. But when it came time to pay, Tapoy’s partners did not deliver.
As a result of the ruling, TapeJoy will have to clean up its business by monitoring advertisers’ offers submitted to consumers and uniquely display the conditions that describe how rewards are earned. It will also be necessary to ensure that offers are distributed and to investigate consumer complaints if they are not. The FTC states that there will be a fine of up to $ 43,280 for each violation complying with the terms of the settlement.
Tapjoy’s business model works as an intermediary between advertisers, gamers and game developers. Mobile game developers integrate their technology to display advertisements – aka “offers” – to their own customers, so that they can pay for their users’ activity. When the consumer offers to complete whatever action is required, they are the ones to earn in-game coins or other virtual currency. App developers then earn a percentage of that advertising revenue.
But this was not happening often, the FTC said. Players jump through hoops, even spending occasional money and turning on their sensitive data, only to find nothing in return.
Furthermore, it said that Tapjoy knew that his partners were cheating these consumers and he took action, even when “hundreds of thousands” of consumers filed complaints. It also hurt game developers who were deceived by the promised advertising revenue they otherwise would have earned.
Acting Deputy Director of the FTC’s Bureau of Consumer Protection, Frank Gorman, said in a statement, “Tappose promised gamers in-app awards to meet the advertising offers made by their partners, but not often delivered.” When Tapjoy Just as companies make promises that depend on the performance of their partners, then they are on the hook to ensure that those promises are kept. “
The FTC said Tapoy’s conduct violated both the FTC Act’s unfair trade practices as well as the ban on fraudulent practices. It will now have to actively work to end fraud in its industry, otherwise Tapjoy will be held accountable.
App platforms such as Apple and Google have struggled with shady businesses over the years, targeting their own customers.
Recently, Apple implemented a policy that requires developers to state in their App Store listings what kind of information an app collects from customers and how data is used to track users. This policy also wraps up whatever third-party advertising technology can be integrated into the app.
There is a so-called not-so-subtle push to prevent developers from working with bad actors (such as Tapoja, allegedly) to monetize their apps and games, and instead turn to a business model Where Apple’s profit is: membership. Apple has, brilliantly, positioned it as a fight for consumer privacy and not for consumer dollars.
The interesting thing about this FTC ruling is that it lays down a mistake for Tapjoy and others directly at the feet of the platforms.
Commissioners Rohit Chopra and Rebecca Kelly Sloter, in a joint statement, described Tapjoy as “a minnow next to the gatekeeping giants of the mobile gaming industry, Apple and Google”.
“By controlling the major app stores, these companies enjoy enormous power to impose taxes and regulations on the mobile gaming industry, which was generating nearly $ 70 billion annually even before the epidemic. All of us should be concerned that gatekeepers may harm developers and Squel Innovation. “The obvious example is rent clearance: Apple and Google charge up to 30% of sales to mobile app developers on their platforms, and even try to avoid this tax through offering alternative payment systems to developers Prevent from, ”he said.
Commissioners have also mentioned that “big gaming companies” are taking legal action against these practices – a lawsuit against Appern’s App Store on App Store commission. But it has been said that smaller developers fear retaliation for speaking out, as it could destroy their business if they were to be banned from the App Store.
In other words, the FTC blames the App Store business model for leading developers to turn on companies like Tapjoy to sustain themselves.
“This market structure also has a wide impact on gamers and consumers. Under heavy taxation by Apple and Google, developers have been forced to adopt alternative monetization models that rely on monitoring, manipulation and other harmful practices, ”the statement reads.
This is not the first FTC action that has taken place as a result of the modern App Store business model. Last year, the FTC, following children’s app developer HyperBeard in violation of the Children’s Online Privacy Protection Act (COPPA), used third-party ad trackers to use behavioral advertising .
Apple has been given much credit in recent weeks for its privacy push with the launch of its so-called App Store “Nutrition Label”, which helps to better expose bad actors in the mobile app market. But some recent reporting lacks balance.
Many reports neglected to explain why these alternative business models came in the first place. It also often does not elaborate on how Apple would benefit financially from the subscriptions resulting from this mobile advertising clampdown. In addition, it is seldom noted that Apple itself advertises behavior within its app based on user data that it collects from its party’s first app and services catalog. This is not to say that Apple is not doing a service with its privacy push, but it is a complicated matter – it is not a game. You do not have to take one side or the other.
The commissioners also indicated in their joint statement that the regulation would also come soon for app platform providers, Apple and Google, and not just for mobile advertising intermediaries such as Tapoys.
“… when it comes to addressing deep structural problems in this gameplay, which is a threat to both gamers and developers, the commission will need to use all of its tools – competition, consumer protection, and data security . Gaming gatekeeper, “he said.