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P&G terminates plan to acquire razor startup Billie following FTC lawsuit
Procter & Gamble will not acquire women’s beauty products startup Billie, as previously planned, following action taken by the U.S. Federal Trade Commission to stop the deal from proceeding. In December, the FTC sued to block P&G’s acquisition of the New York-based startup Billie, a maker of women’s razors and other beauty products, on the grounds that the merger would eliminate competition in the wet shave razor market.
Today, P&G and Billie issued a joint statement, expressing their regret over the FTC’s decision to attempt to block their merger, which led to the deal’s termination:
We were disappointed by the FTC’s decision and maintain there was exciting potential in combining Billie with P&G to better serve more consumers around the world. However, after due consideration, we have mutually agreed that it is in both companies’ best interests not to engage in a prolonged legal challenge, but instead to terminate our agreement and refocus our resources on other business priorities.
Billie had made a name for itself in the women’s razor market by offering to eliminate the so-called “pink tax,” which refers to how women’s products are often marked up at higher price points compared with similar products aimed at men. It later expanded into the broader beauty market with a focus on more natural products that are free of additives and chemicals, including sulfates, parabens, formaldehydes, GMOs, drying alcohols, synthetic dyes, fragrances, cheap foaming agents, unstable silicones and BHT.
The startup was also particularly successful in capturing the interest of a younger, Gen Z to millennial-aged consumer, who responded to its mission as well as its modern, and often even progressive, marketing across social media and the web. In its advertisements, Billie would show women with body hair — a message that went against the grain of traditional societal expectations, where women are often shown in marketing messages — including razor ads — as already hairless and smooth.
Billie’s message was that women should feel free to do what they want about their body hair — but for those who prefer to shave, it would be happy to sell them an affordably priced razor.
What also made Billie interesting was its business model. The company offers to ship replacement blades on a subscription basis to its customers, which helped it grow revenues and customer loyalty.
Ahead of the P&G acquisition, Billie was planning to expand into physical retail stores, which would have made the brand a more direct competitor to P&G products, the FTC had said.
“As its sales grew, Billie was likely to expand into brick-and-mortar stores, posing a serious threat to P&G,” noted Ian Conner, director of the FTC’s Bureau of Competition, in a statement issued last month. “If P&G can snuff out Billie’s rapid competitive growth, consumers will likely face higher prices,” he added.
As a result of the FTC’s actions, the companies chose to put an end to their plans to merge as opposed to pursuing further legal action.
The FTC praised this decision in a release issued today. Reuters also reported on the companies’ decision to terminate.
“Procter & Gamble’s abandonment of the acquisition of Billie is good news for consumers who value low prices, quality, and innovation,” the FTC statement reads. “Billie is a direct-to-consumer company whose advertising targets customers who are tired of paying more for comparable razors. The FTC voted to challenge this merger because it would have eliminated dynamic competition from Billie.”
The FTC lawsuit was the second antitrust suit the agency filed in 2020 after it previously sued to block Edgewell Personal Care’s (maker of Schick razors) $1.37 billion deal to acquire the razor startup Harry’s, Inc., another direct-to-consumer brand. As a result, that deal fell through, too.
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FTC sues to block P&G’s acquisition of Billie, a razor startup for women
The Federal Trade Commission has sued to block Procter & Gamble’s acquisition of Billie, a NY-based startup that sells razors and body wash.
In the notice, the FTC alleged that the merger would “eliminate innovative nascent competitors for wet shave razors” to the loss of consumers.
Billie was founded in 2017 with the goal of fighting the “pink tax” on goods marketed to women, including razors and body wash. It went up against companies like P&G and Edgewell Personal Care by offering high-quality and cheap razors. The company announced its intent to be acquired by P&G after raising just $35 million in venture capital in June.
“As its sales grew, Billie was likely to expand into brick-and-mortar stores, posing a serious threat to P&G. If P&G can snuff out Billie’s rapid competitive growth, consumers will likely face higher prices,” Ian Conner, director of the FTC’s Bureau of Competition said in a statement.
P&G has been on a buying spree as of late. Along with the Billie news, Procter & Gamble acquired Walker & Company, which created Bevel, a grooming line for men of color, and Form, a hair-care line for women of color. In February 2019, P&G announced plans to acquire This is L, a feminine-care brand that sells tampons, pads and wipes.
If the FTC wins, this is another blow for direct-to-consumer brands on the base of competition dynamics. In May 2019, Edgewell Personal Care announced it intended to buy Harry’s, another direct-to-consumer shaving brand. In February 2020, the FTC filed a lawsuit to block the deal from happening, similarly citing how the deal would limit competition and innovation in the razor market.
Unlike Harry’s, Billie was bought before it broke into brick-and-mortar retail stores. If the deal doesn’t close, Billie lost precious time it could have used to expand into new locations and markets — and P&G will lose some of its competitive advantage in the women’s shaving world.
Harry’s and Billie’s blocks could negatively trickle down to hurt direct-to-consumer products looking at health and wellness more broadly.
Note that exit market isn’t as dull for all companies in the consumer packaged goods (CPG) world. We’ve seen deals close like Blue Bunny’s buy of Halo Top, Mars’ acquisition of Kind Bars and, of course, Unilever’s $1 billion acquisition of Dollar Shave Club.
Andrea Hernández, a founder and consultant on food and beverage CPG, says that DTC companies often need to partner with mega-businesses to get the distribution scale they need, focusing more on omni-channel presence versus a single seller point.
“It’s very limited for these companies to scale at the same level and grow without incurring debt or needing constant injections of [money],” she said. “Or [you can go] the preferred route which is having BigDaddyCorp come whisk you away. You get a success story and the resources to continue your journey.”
That said, the coronavirus has even impacted food CPG companies by forcing them to slash SKUs (or stock keeping units) and prioritize essential goods. Whereas before, CPG companies might stock a variety of goods for a variety of customer needs, they’re now prioritizing a smaller slice of the pie to manage uncertainty among consumer behavior. Long-term, this means that CPGs might be buying fewer of the Billies and Harry’s of the world and just focusing on what’s working now.
Regardless of how this plays out, today’s news shows that the FTC is paying more attention than ever to consumer and tech.
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FTC votes to review influencer marketing rules & penalties
Undisclosed influencer marketing posts on social media should trigger financial penalties, according to a statement released today by the Federal Trade Commission’s Rohit Chopra. The FTC has voted 5-0 to approve a Federal Register notice calling for public comments on questions related to whether The Endorsement Guides for advertising need to be updated.
“When companies launder advertising by paying an influencer to pretend that their endorsement or review is untainted by a financial relationship, this is illegal payola,” Chopra writes. “The FTC will need to determine whether to create new requirements for social media platforms and advertisers and whether to activate civil penalty liability.”
Currently the non-binding Endorsement Guides stipulate that “when there is a connection between an endorser and a seller of an advertised product that could affect the weight or credibility of the endorsement, the connection must be clearly and conspicuously disclosed.” In the case of social media, that means creators need to note their post is part of an “ad,” “sponsored” content or “paid partnership.”
But Chopra wants the FTC to consider making those rules official by “Codifying elements of the existing endorsement guides into formal rules so that violators can be liable for civil penalties under Section 5(m)(1)(A) and liable for damages under Section 19.” He cites weak enforcement to date, noting that in the case of department store Lord & Taylor not insisting 50 paid influencers specify their posts were sponsored, “the Commission settled the matter for no customer refunds, no forfeiture of ill-gotten gains, no notice to consumers, no deletion of wrongfully obtained personal data, and no findings or admission of liability.”
Strangely, Chopra fixates on Instagram’s Branded Content Ads that let marketers pay to turn posts by influencers tagging brands into ads. However, these ads include a clear “Sponsored. Paid partnership with [brand]” and seem to meet all necessary disclosure requirements. He also mentions concerns about sponcon on YouTube and TikTok.
Additional targets of the FTC’s review will be use of fake or incentivized reviews. It’s seeking public comment on whether free or discounted products influence reviews and should require disclosure, how to handle affiliate links and whether warnings should be posted by advertisers or review sites about incentivized reviews. It also wants to know about how influencer marketing affects and is understood by children.
Chopra wisely suggests the FTC focus on the platforms and advertisers that are earning tons of money from potentially undisclosed influencer marketing, rather than the smaller influencers themselves who might not be as well versed in the law and are just trying to hustle. “When individual influencers are able to post about their interests to earn extra money on the side, this is not a cause for major concern,” he writes, but “when we do not hold lawbreaking companies accountable, this harms every honest business looking to compete fairly.”
While many of the social media platforms have moved to self-police with rules about revealing paid partnerships, there remain gray areas around incentives like free clothes or discount rates. Codifying what constitutes incentivized endorsement, formally demanding social media platforms to implement policies and features for disclosure and making influencer marketing contracts state that participation must be disclosed would all be sensible updates.
Society has enough trouble with misinformation on the internet, from trolls to election meddlers. They should at least be able to trust that if someone says they love their new jacket, they didn’t secretly get paid for it.
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AT&T will pay $60 million over fake unlimited data ‘bait and switch scam’
AT&T is being punished at last for its shady claims of plans with “unlimited data” but were in reality nothing of the kind: The company has agreed to a $60 million settlement with the FTC, which has pursued the case for years. Some 3.5 million affected customers can expect partial refunds — little more than pocket money, but it’s something.
The complaint was filed almost exactly five years ago, after customer complaints from previous years had piled up. AT&T, after offering truly unlimited data plans for a few years, made changes to how the plans worked but not to how they were advertising. Starting in 2011, the company began throttling to a fraction of the speed they normally got customers with “unlimited data” who hit data caps. We’re talking kilobits here.
Naturally that’s not quite in line with the “unlimited” claims, and some people took AT&T and others to court early on over it. But the FTC’s 2014 complaint indicated that the feds were taking this seriously.
Because the complaint was so obviously true, AT&T attempted to thwart it via process, claiming that the net neutrality rules adopted in 2015 moved the authority to regulate mobile carriers from the FTC to the FCC, retroactively mooting the case. They pursued this ridiculous argument until last year, when a federal court slapped it down and the FTC’s process was allowed to continue unimpeded. And here we are 18 months later with a $60 million settlement.
“AT&T’s bait-and-switch scam is a good window into the many harms that result from dominant companies operating without the discipline of meaningful competition,” said FTC Chairman Rohit Chopra in a spicy statement accompanying the announcement. “Their market power, financial resources, and one-sided information gives them license to ignore their own contractual obligations while aggressively enforcing every little clause in the fine print. Consumers can accept the bad deal, walk away, or fight it, but each choice carries a cost, with dominant firms prevailing almost every time.”
Although $60 million is a drop in the bucket for a company the size of AT&T, the FTC action and other pressure also put executives on warning for prioritizing profits over customers with scams like this one.
“The company could have upheld its obligations to its customers by making the right infrastructure investments,” Chopra continued. “It certainly had the money to do so. In 2012, as the company boasted to investors that customers were fleeing its unlimited plan for tiered plans, it spent more on share buybacks than it invested in its wireless network. The bottom line is that AT&T fleeced its customers to enrich its executives and its investors.”
Unfortunately those customers will remain fleeced, as there are some 3.5 million of them and only $60 million to distribute. This will be divided between current and former AT&T customers as follows, according to the proposed settlement:
- $7.5 million to be split by current AT&T customers who experienced throttling to 128 kbps
- $29.7 million to be split by current AT&T customers who experienced throttling to 256 or 512 kbps
- $6.3 million to be split by former AT&T customers who experienced throttling to 128 kbps
- $16.5 million to be split by former AT&T customers who experienced throttling to 256 or 512 kbps
All this will be done “pro rata,” so if you were an early adopter who got throttled to 128 kbps every month of your year-long contract, you’ll get a bigger share than someone who only went over once and got throttled to 512 kbps.
There’s no need to fill anything out or submit a claim; if you’re currently an AT&T customer, you’ll get a bill credit, and if you’re a former customer you should get a check in the mail.
Naturally AT&T is barred from pulling anything like this again: The company can’t claim something is “unlimited” without prominent disclosure of the actual limitations on the service.
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Following FTC complaint, Google rolls out new policies around kids’ apps on Google Play
Google announced this morning a new set of developer policies aimed at providing additional protections for children and families seeking kid-friendly apps on Google Play. The new policies require that developers ensure their apps are meeting all the necessary policy and regulatory requirements for apps that target children in terms of their content, ads and how they handle personally identifiable information.
For starters, developers are being asked to consider whether children are a part of their target audience — and, if they’re not, developers must ensure their app doesn’t unintentionally appeal to them. Google says it will now also double-check an app’s marketing to confirm this is the case and ask for changes, as needed.
Apps that do target children have to meet the policy requirements concerning content and handling of personally identifiable information. This shouldn’t be news to developers playing by the rules, as Google has had policies around “kid-safe” apps for years as part of its “Designed for Families” program, and countries have their own regulations to follow when it comes to collecting children’s data.
In addition, developers whose apps are targeting children must only serve ads from an ads network that has certified compliance with Google’s families policies.
To enforce these policies at scale, Google is now requiring all developers to complete the new target audience and content section of the Google Play Console. Here, they will have to specify more details about their app. If they say that children are targeted, they’ll be directed to the appropriate policies.
Google will use this information, alongside its review of the app’s marketing materials, in order to categorize apps and apply policies across three target groups: children, children and older users, and older users. (And because the definition of “children” may vary by country, developers will need to determine what age-based restrictions apply in the countries where their app is listed.)
Developers must comply with the process of filling out the information on Google Play and come into compliance with the updated policies by September 1, 2019.
The company says it’s committed to providing “a safe, positive environment” for kids and families, which is why it’s announcing these changes.
However, the changes are more likely inspired by an FTC complaint filed in December, in which a coalition of 22 consumer and public health advocacy groups, led by Campaign for a Commercial-Free Childhood (CCFC) and Center for Digital Democracy (CDD), asked for an investigation of kids’ apps on Google Play.
The organizations claimed that Google was not verifying apps and games featured in the Family section of Google Play for compliance with U.S. children’s privacy law COPPA.
They also said many so-called “kids” apps exhibited bad behaviors — like showing ads that are difficult to exit or showing those that require viewing in order to continue the current game. Some apps pressured kids into making in-app purchases, and others were found serving ads for alcohol and gambling. And others, still, were found to model harmful behavior or contain graphic, sexualized images, the groups warned regulators.
The time when violations like these can slip through the cracks is long past, thanks to increased regulatory oversight across the online industry by way of laws like the EU’s GDPR, which focuses on data protection and privacy. The FTC is also more keen to act, as needed — it even recently doled out a record fine for TikTok for violating COPPA.
The target audience and content section are live today in the Google Play Console, along with documentation on the new policies, a developer guide and online training. In addition, Google says it has increased its staffing and improved its communications for the Google Play app review and appeals processes in order to help developers get timely decisions and understand any changes they’re directed to make.
Update, 5/29/19, 4:30 PM ET:
Following Google’s announcement, the Campaign for a Commercial-Free Childhood (CCFC), which led the FTC complaint, issued a statement in response.
“It’s great that our coalition’s advocacy has awoken to Google to the massive issues with kids apps in the Play Store,” said CCFC Director Josh Golin. “Unfortunately, there’s not a lot of substance to these changes and it’s concerning that Google remains intent on outsourcing responsibility for compliance to developers rather than taking real steps to enforce its own policies.”
“Furthermore, if Google is serious about cracking down on developers that elide their legal responsibilities by pretending their apps aren’t child-directed, they should start by looking in the mirror. YouTube violates COPPA at a massive scale every day and Google’s laughable defense is that the site is only intended for 13 and up,” he added.
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FTC smacks down robocallers, but the penalties don’t match their heinous crimes
The fight against robocallers is just getting started, and the wheel of justice turns slowly, but the FTC just took down a handful of major operations responsible for billions of unwanted calls, some of them adding additional fraud to the mix. The money coming out of the cases is surprisingly small, however — but there’s a reason for that.
In an announcement yesterday, the FTC said it had taken down four operations: NetDotSolutions, which did all kinds of marketing with a custom mass dialing platform; Higher Goals Marketing, which promised fake debt relief; Pointbreak Media, which threatened to delist companies from Google unless they paid; Veterans of America, AKA Saving Our Soldiers, AKA Act of Valor, whose creator Travis Deloy Peterson deserves a special place in hell for scamming people trying to donate vehicles to vets.
Together they accounted for some two billion calls, which in the context of the five billion made every month may seem to be a drop in the bucket, but at this point even a slight reduction is welcome.
What is less heartening is the scale of the penalties. Although the cases resulted in judgments totaling some 24 million dollars, the actual amount the scammers will end up paying will end up closer to $3-4 million. One scammer whose judgments totaled more than $5 million will be suspended when he pays just $18,332 — and whatever comes from the sale of his shiny new Mercedes.
I talked with an FTC spokesperson about why this is the case. They explained that the judgment amount is essentially a ceiling defined by how much consumer harm was done, but most times the defendants have nowhere near that much available as money or assets. You can only get as much as they have, and sometimes that’s not a lot.
Especially in Florida, they went on, where the Homestead rule means that houses can’t be seized in these proceedings — meaning a robocall scammer based in the state could make 10 million bucks, drop it all on a house, and then declare they have no assets when the FTC or whoever comes knocking. This seems likely to be the case with Mr “I only have 18 grand and a 2017 Mercedes CLS” above, who is indeed a Floridian.
The FTC goes to great lengths to investigate and enumerate a defendant’s assets, but they can’t seize what isn’t there. In the case of a large company like Dish, a massive judgment like last year’s $180 million one may end up being paid in full — but individuals and small, fly-by-night businesses are considerably harder to pin down.
Even so, the agency collects quite a bit of cash to return to affected consumers, which should happen with the money here as well. You won’t see a dime just for getting annoyed by calls, though — you’d need to show that it was one of these companies and that they defrauded you, or attempted to.
More importantly, the people and companies in question are immediately shut down and the people involved forbidden from doing anything like this again. Consumer relief is the FTC’s goal, and if they chose to litigate, the case could be drawn out for years, all while the company and call network continues to operate or develops layers of insulation against the law.
You can read the full release and order documents at the FTC’s site — but be warned it may make you angry to hear about these slimeballs living the high life.
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FTC tells ISPs to disclose exactly what information they collect on users and what it’s for
The Federal Trade Commission, in what could be considered a prelude to new regulatory action, has issued an order to several major internet service providers requiring them to share every detail of their data collection practices. The information could expose patterns of abuse or otherwise troubling data use against which the FTC — or states — may want to take action.
The letters requesting info (detailed below) went to Comcast, Google, T-Mobile and both the fixed and wireless sub-companies of Verizon and AT&T. These “represent a range of large and small ISPs, as well as fixed and mobile Internet providers,” an FTC spokesperson said. I’m not sure which is meant to be the small one, but welcome any information the agency can extract from any of them.
Since the Federal Communications Commission abdicated its role in enforcing consumer privacy at these ISPs when it and Congress allowed the Broadband Privacy Rule to be overturned, others have taken up the torch, notably California and even individual cities like Seattle. But for enterprises spanning the nation, national-level oversight is preferable to a patchwork approach, and so it may be that the FTC is preparing to take a stronger stance.
To be clear, the FTC already has consumer protection rules in place and could already go after an internet provider if it were found to be abusing the privacy of its users — you know, selling their location to anyone who asks or the like. (Still no action there, by the way.)
But the evolving media and telecom landscape, in which we see enormous companies devouring one another to best provide as many complementary services as possible, requires constant reevaluation. As the agency writes in a press release:
The FTC is initiating this study to better understand Internet service providers’ privacy practices in light of the evolution of telecommunications companies into vertically integrated platforms that also provide advertising-supported content.
Although the FTC is always extremely careful with its words, this statement gives a good idea of what they’re concerned about. If Verizon (our parent company’s parent company) wants to offer not just the connection you get on your phone, but the media you request, the ads you are served and the tracking you never heard of, it needs to show that these businesses are not somehow shirking rules behind the scenes.
For instance, if Verizon Wireless says it doesn’t collect or share information about what sites you visit, but the mysterious VZ Snooping Co (fictitious, I should add) scoops all that up and then sells it for peanuts to its sister company, that could amount to a deceptive practice. Of course it’s rarely that simple (though don’t rule it out), but the only way to be sure is to comprehensively question everyone involved and carefully compare the answers with real-world practices.
How else would we catch shady zero-rating practices, zombie cookies, backdoor deals or lip service to existing privacy laws? It takes a lot of poring over data and complaints by the detail-oriented folks at these regulatory bodies to find things out.
To that end, the letters to ISPs ask for a whole boatload of information on companies’ data practices. Here’s a summary:
- Categories of personal information collected about consumers or devices, including purposes, methods and sources of collection
- how the data has been or is being used
- third parties that provide or are provided this data and what limitations are imposed thereupon
- how such data is combined with other types of information and how long it is retained
- internal policies and practices limiting access to this information by employees or service providers
- any privacy assessments done to evaluate associated risks and policies
- how data is aggregated, anonymized or deidentified (and how those terms are defined)
- how aggregated data is used, shared, etc.
- “any data maps, inventories, or other charts, schematics, or graphic depictions” of information collection and storage
- total number of consumers who have “visited or otherwise viewed or interacted with” the privacy policy
- whether consumers are given any choice in collection and retention of data, and what the default choices are
- total number and percentage of users that have exercised such a choice, and what choices they made
- whether consumers are incentivized to (or threatened into) opt into data collection and how those programs work
- any process for allowing consumers to “access, correct, or delete” their personal information
- data deletion and retention policies for such information
Substantial, right?
Needless to say, some of this information may not be particularly flattering to ISPs. If only 1 percent of consumers have ever chosen to share their information, for instance, that reflects badly on sharing it by default. And if data capable of being combined across categories or services to de-anonymize it, even potentially, that’s another major concern.
The FTC representative declined to comment on whether there would be any collaboration with the FCC on this endeavor, whether it was preliminary to any other action and whether it can or will independently verify the information provided by the ISPs contacted. That’s an important point, considering how poorly these same companies represented their coverage data to the FCC for its yearly broadband deployment report. A reality check would be welcome.
You can read the rest of the letter here (PDF).
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Consumer advocacy groups call on FTC to investigate kids’ apps on Google Play
A coalition of 22 consumer and public health advocacy groups, led by Campaign for a Commercial-Free Childhood (CCFC) and Center for Digital Democracy (CDD), have today filed a complaint with the Federal Trade Commission asking them to investigate and sanction Google for how its Google Play Store markets apps to children. The complaint states that Google features apps designed for very young children in its Play Store’s “Family” section, many of which are violating federal children’s privacy law, exposing kids to inappropriate content and disregarding Google’s own policies by luring kids into making in-app purchases and watching ads.
Google Play ‘Family’ section
Google first introduced its “Designed for Families” program back in 2015, which gives developers of kid-friendly apps meeting certain guidelines additional visibility in the Play Store. This includes a placement in the Family section, where apps are organized by age appropriateness.
To qualify, “Family” apps must abide by specific content policies, Google’s Developer Distribution Agreement and the Designed for Families DDA Addendum. The apps also must meet the Designed for Families program requirements. Legal compliance with federal privacy laws, including COPPA (Children’s Online Privacy Protection Rule), are among the requirements.
COPPA is designed to protect children under the age of 13 by giving parents control over what information sites and apps can collect from their kids.
Above: Google Play store showcases children’s content in its own dedicated sections
COPPA violations
But the new FTC complaint claims that Google is not verifying COPPA compliance when it accepts these apps and, as a result, many are in continual violation of the law.
“Our research revealed a surprising number of privacy violations on Android apps for children, including sharing geolocation with third parties,” said Serge Egelman, a researcher at the University of California, Berkeley, in a statement shared by the group. “Given Google’s assertion that Designed for Families apps must be COPPA compliant, it’s disappointing these violations still abound, even after Google was alerted to the scale of the problem,” he added.
TechCrunch asked the coalition if it had some idea about how many apps were in violation of COPPA, and were told the groups don’t know an exact number.
“From our survey — and more comprehensive analyses like the PET Study — it seems fairly prevalent,” Lindsey Barrett, Staff Attorney at Georgetown’s Institute for Public Representation, told us.
“The PET Study found that 73 percent of the kids apps in the Play store transmitted sensitive data over the internet, and we saw apps sending geolocation without notice and verifiable parental consent, and sending personal information unencrypted,” Barrett said. “Further, under COPPA, children’s PII cannot be used for behavioral advertising. Yet, many of the children’s apps we looked at were sending information to ad networks which say their services should not be used with children’s apps,” she added.
Other harms
The apps also engage in other bad behaviors, like regularly showing ads that are difficult to exit or showing those that require viewing in order to continue the current game, according to the complaint. Some apps pressure kids into making in-app purchases — in one example, the game characters were crying if the kids didn’t buy the locked items, it notes. Others show ads for alcohol and gambling, despite those being barred by Google’s Ad Policy.
Above: disturbing images from TabTale apps
The coalition additionally called out some apps for containing “graphic, sexualized images” like TutoTOONS “Sweet Baby Girl Daycare 4 – Babysitting Fun,” which has more than 10 million downloads. (The game has a part where kids change a baby’s diaper, wipe their diaper area, then rub powder all over the baby’s body.) Others model harmful behavior, like TabTale’s “Crazy Eye Clinic,” which teaches children to clean their eyes with a sharp instrument, and has more than one million downloads. (The game is currently not available on Google Play and its webpage is down.)
The complaint also broadly takes issue with apps that use common SDKs like those from Unity or Flurry (disclosure: Flurry and TechCrunch share a corporate parent) to collect device identifiers from the children’s apps.
“Nearly three-quarters of the apps in the Family section transmit device identifiers to third parties,” reads the complaint. “There is no way for us to know for sure what the device identifiers are used for. Since many of the apps send device identifiers to third parties that specialize in monetizing apps and/or engaging in interest-based (behavioral) advertising, it seems unlikely that this information is being used solely to support internal operations,” it says.
Above: Strawberry Shortcake Puppy Palace was called out for aggressive monetization efforts. Strawberry tells kids to buy things to keep the puppy happy — the implication is if you don’t pay, you’re making puppies sad.
The groups say that Google has been aware of all these problems for some time, but hasn’t taken adequate steps to enforce its criteria for developers. As a result, the consumer advocacy groups are urging the FTC to investigate the Play Store’s practices.
The coalition had previously asked the FTC to investigate developers of children’s apps aimed at preschoolers who were using manipulative advertising. But today’s complaint is focused on Google.
“Google (Alphabet, Inc.) has long engaged in unethical and harmful business practices, especially when it comes to children,” explained Jeff Chester, executive director of the Center for Digital Democracy. “And the Federal Trade Commission has for too long ignored this problem, placing both children and their parents at risk over their loss of privacy, and exposing them to a powerful and manipulative marketing apparatus. As one of the world’s leading providers of content for kids online, Google continues to put the enormous profits they make from kids ahead of any concern for their welfare,” Chester said.
Apple was not similarly called out because a similar analysis has not yet been done on its app marketplace, Josh Golin, executive director at CCFC told us. In Google’s case, he explained, two major studies found widespread issues with the Play Store apps for kids. One from Berkeley researchers found widespread COPPA non-compliance; the other, by University of Michigan researchers, found children’s play experience was often completely interrupted and undermined by aggressive marketing tactics.
The complaint comes at a time where there is increased scrutiny as to how tech companies are misusing and abusing consumer data and violating privacy. Kids game have already been the subject of some concern. And this morning, an NYT investigation into Facebook revealed it had shared more of users’ personal data than disclosed with major tech companies, following a year of data scandals.
The issue of data privacy is an industry-wide problem. Tech companies’ failures on this front will likely lead to increased regulation going forward.
Not all the named developers were immediately available to comment this morning. We’ll update if comments are provided. (Update: TutoToons says they removed the inappropriate content from the app after becoming aware of the complaint. They urged parents and child advocacy groups to reach out to them directly in the future.)
Google says it’s taking the complaint seriously. It has removed thousands of apps from its Designed for Families program this year, and rejects a third of applications.
“Parents want their children to be safe online and we work hard to protect them. Apps in our Designed for Families program have to comply with strict policies on content, privacy and advertising, and we take action on any policy violations that we find,” a Google spokesperson says. “We take these issues very seriously and continue to work hard to remove any content that is inappropriately aimed at children from our platform,” they added.
The full complaint is below.
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Amazon will refund millions of unauthorized in-app purchases made by kids
Amazon will refund millions of unauthorized in-app purchases kids made on mobile devices, having now dropped its appeal of last year’s ruling by a federal judge who sided with the Federal Trade Commission in the agency’s lawsuit against Amazon. The FTC’s original complaint said that Amazon should be liable for millions of dollars it charged customers, because of the way… Read More
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Court holds Amazon liable for years of unauthorized in-app purchases made by kids
In an entirely unsurprising ruling, a federal judge has sided with the FTC in the agency’s lawsuit against Amazon, which had said that the company did not do enough to safeguard customers against unauthorized in-app purchases made by children. According to the FTC’s original complaint, Amazon billed its customers millions of dollars in these charges. The problem came about… Read More
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