The FTC deserves praise for listening to industry and advocacy concerns over its proposed amended rule on children’s online privacy. Some of the specific points ACT raised in meetings with the Commission were included in its addended rule released on Wednesday. There is still room for improvement and clarity on other outstanding issues which is to be expected. The rulemaking process involves considerable interaction between the regulators and stakeholders, and for issues like this involving a high level of technical expertise, there is also an education process taking place.
Thankfully, the Commission has taken seriously our concerns regarding developers’ need to use tools like analytics that make apps valuable for consumers. The FTC recognized that the simple interface that makes an app easily accessible to children involves a very detailed process of software development. Analytics provide useful feedback about which elements of the app are useful and where improvements should be made and we are glad to see accommodations made for its use in this latest draft. Additionally, the Commission’s modified consideration of the role screen names play in the context of personally identifiable information eliminates the need for developers to collect unneeded data in order to receive consent.
While the overall approach outlined in this latest draft will contribute to greater children’s privacy protections online, a few items require attention. More clarity will be needed on the Commission’s definition of operator which would require small developers to be responsible for data collected even if they never see it or have access to it. We are concerned this new rule would force all apps directed at children to undertake the arduous process of obtaining verifiable parental consent simply because the platform they run on top of has access to personally identifiable information.
It is also worth highlighting that the FTC’s assumptions regarding its effects on operators is cause for considerable concern for children’s app makers. Addressing the regulatory impact on those making education apps for children, the Commission believes the average up front cost to exceed $10,000. This is alarming for most startups and new businesses that hope to test the viability of their ideas before making such a big investment. And the number of developers the Commission expects to be impacted by the new rule is curiously low. They expect on 125 developers to be affected annually by these requirements, yet ACT alone has over 1,000 children’s education app maker members that would likely all be affected.
These last two points underscore why new regulations in a technology industry can be so perilous to small businesses. The FTC’s intentions are good – protecting children online is a laudable pursuit – yet considerable care is necessary to avoid unintended consequences that could stifle innovation. We appreciate the willingness of the Commission to work with ACT on matters affecting developers and will seek a solution to these outstanding issues that protects children’s privacy while preserving the remarkable educational resource app makers provide.