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App Law Within: Rights and Regulation in the Smartphone Age

DOI: 10.1093/ijlit/eat002

Mac Sithigh, D. “App Law Within: Rights and Regulation in the Smartphone Age.” International Journal of Law and Information Technology 21.2 (2013): 154–186. Print.

p.154-155: This article assesses the regulation of smartphone ‘app stores’. At the outset, the significance of smartphones and apps to the debate on Internet regulation is considered, and places in the context of the adoption of smartphones and apps. The importance (commercially and as a study in governance and control) of the iOS App Store (Apple) is highlighted, as is the need to explore forms of regulation that are not linked with a violation of competition law. Section ‘Developer-focused issues’ deals with the relationship between Apple and app developers; three themes of Apple’s Guidelines are identified (content, development and payments), and the ways in which control can be challenged (through jailbreaking, ‘web apps’ and regulatory intervention) are scrutinized. Section ‘Citizen and consumer-focused issues’ considers three ways in which apps are already regulated by law. The focus is on the protection of consumers (particularly through the UK system for ‘premium rate services’), but a discussion of user privacy and the regulation of video games and video-on-demand services in Europe is also included. Finally, in the section ‘Conclusion’, the tension between comparatively ‘open’ and ‘closed’ app stores is highlighted; the problems of applying general provisions to emerging formats are emphasized. It is concluded that the emerging status of non-carrier app stores as neither retailer nor platform means that it is not yet possible to identify the form of regulation that is in operation, but that some steps are available to legislators that could shift the balance between closed and open models. -- Highlighted may 1, 2014

p.155: In work on control and the DVD platform, Gillespie described the DVD sector as being difficult to criticize because ‘no single element of this arrangement is solely responsible for its consequences, or for its missteps’. This is an apt description of the multi-faceted strategy of those who develop smartphone and app stores (eg Apple), which relies, as will be shown in this article, on statute, contract and more in order to be effective. As such, Gillespie’s approach of looking at the exercise of control through different tools and upon different players (eg the network of relations between users, developers, manufacturers and others) can be followed, but with special attention paid to how law facilitates control. In common with the commercial enterprises involved in the development of DVD, the strategy of Apple and its competitors cannot be described as being capable of functioning without relying upon existing law, as it depends on relevant provisions in order to protect and sustain a particular vision for the platform(s). -- Highlighted may 1, 2014

p.156: As Apple has taken a deliberate, conscious decision to ‘police’ its store, its decisions have been the most visible contests over control and power in the public arena. Just as the rhetoric of new media has overstated the idea of disintermediation, without due regard to the persistence of intermediary control over content and commerce or the combination of personalization and bias that replaces one filter with another, tributes to the new opportunities presented by app platforms run the risk of playing down the significance of Apple’s role. -- Highlighted may 1, 2014

p.157: Models of regulation presented in this article, particularly those pertaining to electronic programme guides and for premium rate telephone services (PRS), can therefore contribute to the debate on the role of the iOS App Store and other app stores, although the technological and cultural differences between the appmarket andmarkets such as PRSmean that the objective of this exercise is to understand regulatory goals and tools rather than fitting apps within an existing category. -- Highlighted may 1, 2014

p.158: A key consequence of this shift from phone to smartphone has been the development of the market for apps, which is the subject of this article and an opportunity to consider alternative responses to Zittrain’s provocation on the choice between open and closed models. -- Highlighted may 1, 2014

p.159: The App Store operates a preapproval process (enforced by a Developer Agreement and explained through Review Guidelines and Human Interface Guidelines), and it is this process which frequently triggers media coverage of the ‘rejection’ of an app. An iPhone, without modification, can only be used to download or run applications made available to App Store, so acceptance of an app in the iOS App Store is a critical part of any developer’s strategy. If approved, the revenue from an app is split, with 30 per cent retained by Apple and 70 per cent passed to the developer. -- Highlighted may 1, 2014

p.159: Finally, because of the success of the iPhone, developers may find themselves complying with themore restrictive policies of Apple in respect of all their activities, ie promoting for practical and financial reasons an ‘App Store safe’ version on other platforms rather than creating separate versions for each. -- Highlighted may 1, 2014

p.160: In general, the application of overarching competition law principles (eg abuse of dominance) may be difficult, not relevant for all apps, and is not the primary concern of this article—although the lack of a competition remedy may itself be the basis of a critique of the appropriateness of this system for information technology or justify a particular approach. -- Highlighted may 1, 2014

p.161: Recognizing this limitation, and Wu’s finding that competition laws alone ‘are inadequate for the regulation of information industries’ (because the conventional trigger of price and related abuses is normally absent), the approach now pursued in this article is one of scrutinizing regulatory approaches that do not depend on the use of general competition remedies. -- Highlighted may 1, 2014

p.162: Prior to the development of the smartphone, mobile data access was concentrated in carrier-provided ‘walled gardens’. -- Highlighted may 1, 2014

p.162: As de Reuver puts it in a comprehensive reflection on the age of the walled garden, ‘the main advantage walled gardens offer to end-users is a consistent end-user experience, because all content has the same look and feel. In addition, billing, security and customer support are centralized at the operator to reduce complexity for end-users. From an operator point-of-view, walled gardens guarantee a large share of the revenues and reduce the risk to become mere connectivity providers’. -- Highlighted may 1, 2014

p.162: Yet how much of this can also describe the iOS App Store? De Reuver’s first point, a consistent end-user experience, is a key part of Apple’s strategy. As well as the Review Guidelines discussed in this article, many of which are clearly directed at consistency of user experience, Apple also sets out very detailed Human Interface Guidelines. -- Highlighted may 1, 2014

p.162: The second point, of the centralization of billing, security and customer support is more complex. Billing is indeed centralized in Apple’s case, through the user’s single account, although there is a separation between this billing and the carrier’s billing system (ie themobile bill of the user). -- Highlighted may 1, 2014

p.162: On de Reuver’s final argument, that walled gardens assist carriers in diversifying revenue streams, this too is applicable in the case of Apple, although of course it is ensuring that it is not just a hardware provider—appropriate, perhaps, for the company which dropped the ‘Computer’ from its title some years ago. -- Highlighted may 1, 2014

p.163: It can be observed, therefore, that Apple shares some tools and objectives with carriers. By doing so, it may diminish the role of the carrier. -- Highlighted may 1, 2014

p.163: The CEO of Rovio (responsible for Angry Birds) explains that smartphones have an advantage over previous generations of phones-as-platforms, as the phone company has much less influence over the range of games that are available; he criticizes the former system as a ‘carrier-dominated Soviet model’. -- Highlighted may 1, 2014

p.164: Controversial aspects of the iOS App Store Review Guidelines can be divided into three overall ‘themes’: rejection on content grounds (including some competition-driven restrictions), rejection on development grounds, and the regulation of transactions. -- Highlighted may 1, 2014

p.164: Guideline 2.11 allows duplicates to be rejected, while the following guideline 2.12 allows for ‘not very useful’ apps or those not providing any ‘lasting entertainment value’ to be rejected too. Here, we see Apple’s role as very different to that of an open platform, inserting a quality threshold rather than providing a platform open to all who comply with requirements of legality. -- Highlighted may 1, 2014

p.167: More generally, it is very difficult to use the iPhone for the purpose of writing software. The much-praised Scratch application (used to teach principles of programming within computer education) could not be approved, as its very nature (creating code which runs within the application rather than by utilizing Apple’s systems) violated the then Developer Agreement.This was criticized by a number of programmers as a long-term risk to promoting ‘tinkering’ and the development of computer skills by young or inexperienced users. -- Highlighted may 1, 2014

p.168: Even more controversial are the implications for subscriptions. This is a significant part of the business model for some apps, such as those launched by certain news providers. Although not originally covered by the guidelines, the subsequent extension of the purchase restrictions to subscriptions makes it difficult to provide a non-IAP system for subscribing to content. The objections of newspapers are not just to the financial link with Apple but also the loss of control over the data (eg contact information) of (in-app) subscribers—a longstanding source of importance to newspapers. -- Highlighted may 1, 2014

p.168: It has been shown how the Review Guidelines play a significant role in governing the development of apps. The main observation of this section has been that the guidelines pursue multiple objectives, and are modified in connection with objections and observations from various parties. With this exercise of power inmind, then, we can turn to the ways in which the guidelines can be circumvented or disregarded, should an objection not be dealt with through amendment. -- Highlighted may 1, 2014

p.171: Jobs’ statement praises the openness of HTML5 as compared with the ‘100% proprietary’ Flash. The praising of openness is of particular interest, in the light of the approach to the App Store discussed in this article. -- Highlighted may 1, 2014

p.171: There are various tools by which individual decisions and the overall approach of Apple can be challenged. At the decision level, Apple has recently introduced a ‘Review Board’ for developers to seek the review of a decision. -- Highlighted may 1, 2014

p.171: Discussion of rejections on the Internet is also not unusual, and there are sporadic attempts to catalogue rejections, although Apple discourages this approach: ‘(if) you run to the press and trash us, it never helps’. -- Highlighted may 1, 2014

p.171: Rejection decisions are never published by Apple; this is a notable difference to content rating preapproval systems (eg for films and games) and complaint-driven systems (eg for advertising), although as Apple is acting alone rather than as an industry-wide self-regulatory body, it is not entirely unsurprising. -- Highlighted may 1, 2014

p.175: PhonepayPlus has issued guidance on the application of PRS regulation to app payments (in three categories: for download, in-app payments and ‘freemium’ models which combine free download with optional later payment). However, this only applies to payments that qualify as PRS, ie are charged to a phone bill or pre-paid account, but not payments ultimately taken froma credit, debit or pre-paid card. -- Highlighted may 1, 2014

p.176: Although beyond the scope of the consultation in question, it is clear that payments to typical app stores (including in-app payments), on the other hand, will fall outside of the current approach to PRS without more, as the app store is not the provider of the communications service (the carrier is). -- Highlighted may 1, 2014

p.179: Using some of the language of ‘privacy by design’ and Lessig’s analysis of regulation, the FTC argues that while the iOS App Store and Android Market provide ‘the basic architecture’ for communicating information to users, they ‘should provide a more consistent way for developers to display information’ on data collection and interactivity, perhaps in the store itself, because ‘as gatekeepers of the app marketplace, the app stores should do more’. -- Highlighted may 1, 2014

p.180: With the Californian scheme relying to a great extent on the store as a protector of privacy, and the affordances of the store being a key factor in the extent of potential breaches more generally, there may be some support for an interventionist approach to app approval, in so far as doing so would protect user privacy. The problems of definition or medium specificity that are highlighted in the discussion of ecommerce, above, are not apparent in the case of privacy. -- Highlighted may 1, 2014

p.182: Yet a direct relationship between manufacturer and game developer is not a new one, and Apple is just the latest manufacturer to play this role. Nintendo developed the Nintendo Entertainment System (NES) as a family-friendly console with significant restrictions in its early days of any depiction of drugs, ‘foul language’, smoking and alcohol, and it can be observed that Apple’s approach echoes this—although Nintendo has reduced its restrictions over time, to the extent that the controversial Manhunt 2 (at first, refused classification in the UK) is available on its Wii. -- Highlighted may 1, 2014

p.185-186: It has been argued in this article that law has a key role to play in support of Apple’s chosen model. Initially, if Apple’s actions fall outside of current competition or telecommunications law, this may represent an advantage which depends on the continued adoption of a given definition; this is particularly relevant in the context of telecommunications, where forms of intervention do not (yet) specifically address the app market. However, the core argument is that the combination of copyright law and the ability to contract out of a warranty in an enforceable, valid fashion protects Apple’s strategy of discouraging jailbreaking. Finally, as well as Apple’s consequent ability to control developer actions through its management of the iOS App Store, apps themselves are not beyond the control of public authorities. This means that app stores are not truly unregulated markets, although there is a certain lack of consistency regarding which legal provisions apply which suggest that they may be inefficiently or improperly regulated markets. -- Highlighted may 1, 2014