FTC Taxes Apps: Privacy Changes Result in Quarter Billion Dollar Cost to Education App Developers

App association, ACT, today objected to the immense cost borne by education app makers in the FTC’s proposed changes to children’s online privacy regulations (COPPA). Imposing over a quarter-billion dollars in legal expenses, the proposed rule could spell the end for education apps that have dramatically improved student performance.

“App makers understand that children’s online privacy laws must be updated to reflect the growth of new technologies and the evolution of mobile communications,” said ACT Executive Director Morgan Reed. “Unfortunately, the Commission has failed to grasp both the scope and nature of the app marketplace in its latest regulatory proposal. While perceiving the app economy to be hundreds of times smaller than it actually is, the FTC has paradoxically proposed developers collect more information, not less, to protect children’s privacy. If that wasn’t confusing enough, the FTC believes the world would be a better place if we spent $250 million more on lawyers and $250 million less on developing educational apps and content for kids.”

When the FTC measured the impact of its proposed regulation on education app developers, it estimated only 500 apps initially would be affected with an additional 125 in each successive year. This figure is grossly inaccurate considering the Apple App Store alone has 28,800 education apps. The number is significant when measuring the immense impact this proposal will have on the app industry. Because the Commission anticipates legal and technical certification for every new app would require nearly $10,000, the total costs would easily exceed $250 million. Considering that implementation is accomplished more easily and cheaply during the development stage, app companies will likely pay substantially more to apply these changes retroactively to a software product with an existing customer base on multiple platforms.

“App developers agree that the FTC should be empowered to bring enforcement action against those who violate the online privacy of children,” continued Reed. “However, the FTC’s proposed changes come at enormous cost to app makers while demonstrating a fundamental failure to understand the industry it is seeking to regulate. We support the Commission’s goal that mobile apps should provide a safe learning environment for children. We are deep troubled, however, that the FTC believes the elimination of children’s apps is the way to achieve this. The education app marketplace is a tremendous economic success story with 87% of the most successful products made by small business innovators – many of whom are parents. Requiring these developers to pay $10,000 before writing their first line of code means most of them will no longer seek to make learning tools for children. Explaining to startups that they will need a $10,000 legal investment to get started means they will pursue other opportunities than education.”

Consider who would suffers most under this regulatory regime. The educational impact of touchscreens in early learning environments has attracted widespread acclaim.

Classrooms in:

And in special education settings: Sixty Minutes: Apps for Autism.

“These proposed new fees would absolutely devastate the small business app companies whose innovative learning tools are revolutionizing early education and special education,” continued Reed. “The massive costs would utterly change the face of the ecosystem, marking the end of free kids education apps and putting these valuable resources outside the reach of middle class families.

“The FTC should weigh very carefully the chorus of criticism it has received from its latest proposal. It should make every effort to protect child safety online without taking down children’s education in the process.”

By | 2014-04-14T15:01:57+00:00 September 26th, 2012|