The Federal Trade Commission (FTC) has said they will be investigating in-app purchases for applications marketed to children, such as Smurfs’ Village. The argument is that some children do not understand the difference between real and virtual purchases.

In a letter to Rep. Ed Markey (D-Mass.), FTC Chairman Jon Leibowitz wrote:

We fully share your concern that consumers, particularly children, are unlikely to understand the ramifications of these types of purchases. Let me assure you we will look closely at the current industry practice with respect to the marketing and delivery of these types of applications.

In order to make an in-app purchase, the user must enter their Apple ID and password to complete the transaction. If you are a parent who shares this password with your child and is concerned about whether your child fully understands the consequences of buying a $99 wagon of Smurfberries, you can edit the parental controls to restrict the ability to make in-app purchases.

What is your opinion on the FTC getting involved?

[The Washington Post]

Word is the US federal government, and the always eager European Union, are looking into Apple’s new in-app subscription service. Last year, following complaints from Adobe, they looked into Apple’s ban on cross-compilers for iOS and policies on competing advertisers like Google’s AdMob. Apple ultimately reversed their decision on cross-compilers and Apple may well alter their in-app subscription plans as well but here’s the thing — why is the government looking into Apple?

Most cable companies are monopolies that can package channels in a way that force consumers to pay more than they would if they had a-la-carte alternatives. They can sell cable boxes that haven’t evolved in 10 years while making sure cablecards are difficult to obtain. They can use and abuse copy protection and can lock down your cable box to the extent that you can’t even watch previously recorded programs in your own home on your own TVs. They can set bandwidth caps low enough to dissuade users from Netflix, iTunes, and other competitive services and, apparently, can even buy their own TV networks. They have a complete lock in. Likewise PayPal can freeze your account with little in the way of recourse or accountability, pretty much doing what they want with potentially vast amounts of your money. They have total power over your cash. Verizon can lock down GPS, forcibly put un-removable Bing and crapware on their phones, and get Google to agree to horribly backwards net neutrality concessions. They own your telephonics.

How about the US and EU look into them. How about they fix them. How about they protect consumers money and public airwaves and critical infrastructure elements before they worry so much about our toys. Not to get all Aaron Sorkin on them but just because Apple is a sexy headline and trendy target doesn’t mean every time a huge mega-corporation gets upset with Cupertino the regulators need to rev up their anti-trust PR reps.

If Apple steps out of bounds, if they’re anti-competitive or abusing monopoly position or illegally restraining trade by all means, investigate them and take action. But investigate cable and carriers first. Investigate defacto banks that act with impunity and first.

Protect us first.

Apple’s lock-out of Adobe CS5 iPhone packager as part of the iPhone OS 4 SDK, thus preventing Adobe from locking developers into CS5, has has allegedly so angered the Flash-maker that they’re rumored to have complained to the Department of Justice and Federal Trade Commission, triggering those talks about an inquiry.

Adobe says Apple is stifling competition by barring developers from using Adobe’s products to create applications for iPhones and iPads, said the people who spoke on condition of anonymity because they aren’t authorized to discuss the case.

Adobe, Apple, and the agencies that may or may not be looking into it all declined to comment. Since the smartphone market is thriving, and any developer upset with Apple can choose to develop for Android, webOS, BlackBerry, Nokia, Windows Phone (maybe), etc. — which would ultimately hurt Apple if enough developers decide to do just that — it’s hard to see where government involvement has any place.

And no, you can’t manufacture an artificial “mobile app” market and say Apple has a dominant position in that. Apple has a control on iPhone and iPad apps, that’s it. All other platforms have their own apps completely outside of any Apple involvement or influence. That includes the aforementioned smartphone platforms, Nintendo’s Gameboy and DS lines, Sony’s PSP, Microsoft Windows running or UMPCs and portables (and OS X running on laptops for that matter, which are huge app markets), and — wait for it — the world wide web, which also runs on the iPhone completely outside of Apple’s control.

I understand Adobe being angry — they’re business model requires developers use Flash to build cross-platform apps and native app development hurts them. I understand Flash developers being angry because if they choose to stay Flash-exclusive they lose easy access to the lucrative iPhone/iPad user base. But the case that that anger should translate into government action at this point just doesn’t seem makable.

Then again, this probably isn’t about anything more than headlines right now anyway, is it?

[Bloomberg]

Citing the usual “people familiar with the matter”, the New York Post claims the Department of Justice and Federal Trade Commissions are negotiating over which one of their organizations will inquire into Apple’s new iPhone OS 4 SDK section 3.3.1 — the restriction against cross-compilers in general and Adobe’s Flash CS5 Packager for iPhone in specific.

It will focus on whether the policy, which took effect last month, kills competition by forcing programmers to choose between developing apps that can run only on Apple gizmos or come up with apps that are platform neutral, and can be used on a variety of operating systems, such as those from rivals Google, Microsoft and Research In Motion.

Which, while I’m not a lawyer or headline-seeking politico, doesn’t sound like anything remotely approaching actionable behavior. Inquiry doesn’t mean investigation, however, much less charges are pending. Apple could just as easily be absolved since they’re not a monopoly in smartphones and competition in the app space is thriving.

Neither the DOJ, FTC, or Apple is commenting yet, so this could also just be one of those test-baloons-via-media-attention. Steve Jobs has recently written on the issue of cross-compilers in general in his Thoughts on Flash open letter.

Apple believes cross-compilers aren’t in the best interests of their platform, and in the United States of America, absent monopolistic or other forms of illegal abuse, doesn’t Apple get to decide how they want to run their own platform? And aren’t developers equally free to vote with their apps and, if they don’t like Apple’s choices, develop for other platforms and take their user-bases with them?

[NY Post via 9to5Mac]

The New York Times (via Daring Fireball) reports that the Federal Trade Commission (FTC) is looking into whether the ties between Apple and Google’s respective Boards of Directors violate Section 8 of the Clayton Antitrust Act.

The provision is designed to prevent two rival companies from acting in concert to reduce competition. While Google and Apple have rival mobile phone platforms and cloud services, iPhone vs. Android and Gmail (etc.) vs. MobileMe, Google’s CEO, Eric Schmidt is on Apple’s board of directors and the iPhone makes use of Google technology such as the built-in Google Maps, Google Search, etc.

According to the NYT, however:

Antitrust experts say that investigations of interlocking directorates rarely lead to major confrontations between companies and the government. Executives typically choose to resign from the board of a competitor if it poses a problem rather than face a lengthy investigation or a bruising legal fight.

The article also points out the “closeness” of Google to the Obama administration, and how that “closeness” doesn’t seem to offer Google any insulation from the FTC.