Tapjoy, Inc.; Analysis of Proposed Consent Order to Aid Public Comment, 2670-2673 [2021-00568]
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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Notices
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BILLING CODE 1301–00–D
FEDERAL TRADE COMMISSION
[File No. 172 3092]
Tapjoy, Inc.; Analysis of Proposed
Consent Order to Aid Public Comment
Federal Trade Commission.
Proposed consent agreement;
request for comment.
AGENCY:
ACTION:
The consent agreement in this
matter settles alleged violations of
federal law prohibiting unfair or
deceptive acts or practices. The attached
Analysis of Proposed Consent Order to
Aid Public Comment describes both the
allegations in the draft complaint and
the terms of the consent order—
SUMMARY:
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18:08 Jan 12, 2021
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embodied in the consent agreement—
that would settle these allegations.
DATES: Comments must be received on
or before February 12, 2021.
ADDRESSES: Interested parties may file
comments online or on paper by
following the instructions in the
Request for Comment part of the
SUPPLEMENTARY INFORMATION section
below. Please write ‘‘Tapjoy, Inc.; File
No. 172 3092’’ on your comment, and
file your comment online at https://
www.regulations.gov by following the
instructions on the web-based form. If
you prefer to file your comment on
paper, mail your comment to the
following address: Federal Trade
Commission, Office of the Secretary,
600 Pennsylvania Avenue NW, Suite
CC–5610 (Annex D), Washington, DC
20580, or deliver your comment to the
following address: Federal Trade
Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW,
5th Floor, Suite 5610 (Annex D),
Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT:
Matthew H. Wernz (415–848–5125),
Midwest Regional Office, John C.
Kluczynski Federal Building, 230 South
Dearborn Street, Suite 3030, Chicago, IL
60604.
SUPPLEMENTARY INFORMATION: Pursuant
to Section 6(f) of the Federal Trade
Commission Act, 15 U.S.C. 46(f), and
FTC Rule 2.34, 16 CFR 2.34, notice is
hereby given that the above-captioned
consent agreement containing a consent
order to cease and desist, having been
filed with and accepted, subject to final
approval, by the Commission, has been
placed on the public record for a period
of thirty (30) days. The following
Analysis to Aid Public Comment
describes the terms of the consent
agreement and the allegations in the
complaint. An electronic copy of the
full text of the consent agreement
package can be obtained at https://
www.ftc.gov/news-events/commissionactions.
You can file a comment online or on
paper. For the Commission to consider
your comment, we must receive it on or
before February 12, 2021. Write
‘‘Tapjoy, Inc.; File No. 172 3092’’ on
your comment. Your comment—
including your name and your state—
will be placed on the public record of
this proceeding, including, to the extent
practicable, on the https://
www.regulations.gov website.
Due to the COVID–19 pandemic and
the agency’s heightened security
screening, postal mail addressed to the
Commission will be subject to delay. We
strongly encourage you to submit your
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comments online through the https://
www.regulations.gov website.
If you prefer to file your comment on
paper, write ‘‘Tapjoy, Inc.; File No. 172
3092’’ on your comment and on the
envelope, and mail your comment to the
following address: Federal Trade
Commission, Office of the Secretary,
600 Pennsylvania Avenue NW, Suite
CC–5610 (Annex D), Washington, DC
20580; or deliver your comment to the
following address: Federal Trade
Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW,
5th Floor, Suite 5610 (Annex D),
Washington, DC 20024. If possible,
submit your paper comment to the
Commission by courier or overnight
service.
Because your comment will be placed
on the publicly accessible website at
https://www.regulations.gov, you are
solely responsible for making sure your
comment does not include any sensitive
or confidential information. In
particular, your comment should not
include sensitive personal information,
such as your or anyone else’s Social
Security number; date of birth; driver’s
license number or other state
identification number, or foreign
country equivalent; passport number;
financial account number; or credit or
debit card number. You are also solely
responsible for making sure your
comment does not include sensitive
health information, such as medical
records or other individually
identifiable health information. In
addition, your comment should not
include any ‘‘trade secret or any
commercial or financial information
which . . . is privileged or
confidential’’—as provided by Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and
FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)—
including in particular competitively
sensitive information such as costs,
sales statistics, inventories, formulas,
patterns, devices, manufacturing
processes, or customer names.
Comments containing material for
which confidential treatment is
requested must be filed in paper form,
must be clearly labeled ‘‘Confidential,’’
and must comply with FTC Rule 4.9(c).
In particular, the written request for
confidential treatment that accompanies
the comment must include the factual
and legal basis for the request, and must
identify the specific portions of the
comment to be withheld from the public
record. See FTC Rule 4.9(c). Your
comment will be kept confidential only
if the General Counsel grants your
request in accordance with the law and
the public interest. Once your comment
has been posted on the https://
www.regulations.gov website—as legally
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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Notices
required by FTC Rule 4.9(b)—we cannot
redact or remove your comment from
that website, unless you submit a
confidentiality request that meets the
requirements for such treatment under
FTC Rule 4.9(c), and the General
Counsel grants that request.
Visit the FTC website at https://
www.ftc.gov to read this Notice and the
news release describing the proposed
settlement. The FTC Act and other laws
that the Commission administers permit
the collection of public comments to
consider and use in this proceeding, as
appropriate. The Commission will
consider all timely and responsive
public comments that it receives on or
before February 12, 2021. For
information on the Commission’s
privacy policy, including routine uses
permitted by the Privacy Act, see
https://www.ftc.gov/site-information/
privacy-policy.
Analysis of Proposed Consent Order to
Aid Public Comment
The Federal Trade Commission
(‘‘Commission’’) has accepted, subject to
final approval, an agreement containing
a consent order from Tapjoy, Inc.
(‘‘Tapjoy’’). The proposed consent order
has been placed on the public record for
thirty (30) days for receipt of comments
from interested persons. Comments
received during this period will become
part of the public record. After 30 days,
the Commission will again review the
agreement and the comments received,
and will decide whether it should
withdraw from the agreement and take
appropriate action or make final the
agreement’s proposed order.
Tapjoy operates an advertising
platform within mobile gaming
applications. On the platform, Tapjoy
promotes offers of in-app rewards (e.g.,
virtual currency) to consumers who
complete an action, such as taking a
survey or otherwise engaging with thirdparty advertising. To induce consumers
to engage with third-party advertisers,
Tapjoy offers in-app rewards in the form
of a specified amount of virtual
currency that can be used in the in-app
games. However, in many instances,
Tapjoy never issued the promised
reward to consumers who complete an
action as instructed, or only issued the
currency after a substantial delay.
Consumers who attempt to contact
Tapjoy to complain about missing
rewards have found it difficult to do so,
and even consumers who have been
able to submit a complaint nevertheless
did not receive the promised reward.
The Commission’s proposed
complaint alleges that Tapjoy has
violated Section 5 of the FTC Act. In
particular, the proposed complaint
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alleges that Tapjoy has represented that
consumers will receive a reward of
virtual currency upon completion of a
specific action when, in many instances,
that representation was false,
misleading, or not substantiated at the
time the representation was made.
The proposed order contains
injunctive provisions addressing the
alleged deceptive conduct. Part I.A of
the proposed order prohibits Tapjoy
from making the misrepresentations
alleged in the complaint. Part I.B
requires Tapjoy to make certain
disclosures, specifically that its
advertisers determine whether rewards
are likely to issue, and when consumers
are likely to receive rewards. Part I.C
requires Tapjoy to obtain specified
agreements from the associated
advertiser before a reward is promoted
or offered. Part I.D of the proposed order
requires Tapjoy, before a reward is
promoted or offered, to obtain the
materials used to promote or offer the
reward, to use those materials to attempt
to obtain the reward, to validate the
accuracy of those materials, and to
validate that the reward is delivered
promptly or that any delay is disclosed.
Part I.E requires Tapjoy to provide a
prominently disclosed and easy-to-use
method by which consumers may
submit support requests. Part I.F
requires Tapjoy to investigate patterns
of customer support requests or other
information indicating that a particular
promotion or offer of a reward has
inaccurate instructions or is failing to
deliver the reward.
Parts II through V of the proposed
order are reporting and compliance
provisions. Part II requires
acknowledgments of the order. Part III
requires Tapjoy to notify the
Commission of changes in corporate
status and mandates that the company
submit an initial compliance report to
the Commission. Part IV requires the
company to create certain documents
relating to its compliance with the order
for 10 years and to retain those
documents for a 5-year period. Part V
mandates that the company make
available to the Commission
information or subsequent compliance
reports, as requested.
Finally, Part VI states that the
proposed order will remain in effect for
20 years, with certain exceptions.
The purpose of this analysis is to aid
public comment on the proposed order.
It is not intended to constitute an
official interpretation of the complaint
or proposed order, or to modify in any
way the proposed order’s terms.
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By direction of the Commission.
April J. Tabor,
Acting Secretary.
Statement of Commissioner Rohit
Chopra Joined by Commissioner
Rebecca Kelly Slaughter Summary
• The explosive growth of mobile
gaming has led to mounting concerns
about harmful practices, including
unlawful surveillance, dark patterns,
and facilitation of fraud.
• Tapjoy’s failure to properly police
its mobile gaming advertising platform
cheated developers and gamers out of
promised compensation and rewards.
• The Commission must closely
scrutinize today’s gaming gatekeepers,
including app stores and advertising
middlemen, to prevent harm to
developers and gamers.
The video game business has
solidified its place as a fixture of
America’s entertainment industry.
During the pandemic, revenues in the
sector have reportedly eclipsed those of
the sports and film businesses
combined.1 This period has brought
about a massive increase in mobile
gaming app installs and spending,
cementing gaming as a major magnet for
Americans’ attention.2 The latest
industry offerings rely on deeper social
connectivity features and facilitate
content creation by players. Americans
are hosting birthday parties through
gaming apps, and tens of millions have
attended concerts by major artists on
Fortnite and Roblox.3
Mobile gaming is the fastest growing
segment of the market, where revenues
are primarily generated through in-app
purchases and advertising. Importantly,
this segment is characterized by a
unique market structure dominated by
new gatekeepers, particularly app stores
1 Ben Gilbert, Video-game industry revenues grew
so much during the pandemic that they reportedly
exceeded sports and film combined, Business
Insider (Dec. 23, 2020), https://
www.businessinsider.com/video-game-industryrevenues-exceed-sports-and-film-combined-idc2020-12.
2 Robert Williams, Mobile gaming surges as
pandemic drives 45% jump in app installs,
Marketing Drive (Dec. 2, 2020), https://
www.marketingdive.com/news/mobile-gamingsurges-as-pandemic-drives-45-jump-in-app-installs/
591417/. Gaming expert Joost van Dreunen recently
offered helpful analysis about emerging trends in
this growing industry. The Prof G Show with Scott
Galloway, Pandemic Learnings with Dr. Abdul ElSayed (Dec. 15, 2020), https://
westwoodonepodcasts.com/pods/the-prof-g-showwith-scott-galloway/.
3 See, e.g., Gil Kaufman, Here’s How Many People
Tuned Into Lil Nas X’s Roblox Show, Billboard
(Nov. 17, 2020), https://www.billboard.com/
articles/columns/hip-hop/9485495/lil-nas-x-robloxshow-viewers; see also Joost van Dreunen, The
future is user-generated, SuperJoost Playlist (Nov.
23, 2020), https://superjoost.substack.com/p/thefuture-is-user-generated.
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and advertising middlemen. This
structure is rightfully under more
intense scrutiny, given the challenges
facing developers and the downstream
practices that can harm gamers.
Against this backdrop, the Federal
Trade Commission evaluates an
appropriate remedy to address conduct
of Tapjoy, a mobile advertising platform
that connects gamers, game developers,
and advertisers. As detailed in the
Commission’s complaint, Tapjoy’s
practices allowed users to be cheated of
promised rewards, and developers to be
cheated of promised compensation. The
proposed settlement does not remedy
these past harms, but will require
Tapjoy to better police its platform to
prevent abuses going forward.4
Tapjoy’s Middleman Misconduct
Tapjoy is a major mobile advertising
platform that acts as a middleman
between advertisers, gamers, and game
developers. The platform woos
developers into integrating its
technology by promising payments for
user activity. In a mobile gaming
experience where developers use
Tapjoy’s advertising platform, Tapjoy
displays ‘‘offers.’’ When gamers
complete these ‘‘offers,’’ such as by
signing up for subscriptions or making
purchases, Tapjoy credits the user’s
account with coins or other currency for
use in the game, and developers receive
a percentage of Tapjoy’s advertising
revenue.5
However, according to the FTC’s
complaint, many players jumped
through hoops—and even spent money
and turned over sensitive data—to
complete Tapjoy’s offers, only to receive
nothing in return.6 It appears Tapjoy
amplified false offers by its business
partners, who baited gamers with big
rewards only to cheat them when it was
time to pay up.7 Tapjoy did little to
clean up the mess, even when hundreds
of thousands of gamers filed
complaints.8 This also harmed
developers of mobile games, who were
cheated of advertising revenue they
were entitled to.
In my view, Tapjoy’s conduct violated
the FTC Act’s prohibition on unfair
4 This matter is another example where the lack
of clarity regarding the scope of immunities
conferred by Section 230 of the Communications
Decency Act has given legal ammunition to
platforms seeking to shirk responsibility for their
commercial activity, including sales and advertising
practices. This lack of clarity undermines the ability
of the FTC and other regulators to obtain adequate
monetary relief for misconduct.
5 In other instances, users can receive rewards
directly through the game.
6 Compl. In the Matter of Tapjoy, Inc., ¶¶ 21–29.
7 Compl., id. ¶¶ 8, 15–29.
8 Compl., id. ¶¶ 30–40.
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practices, as well as the prohibition on
deceptive practices.9 The FTC’s
proposed settlement requires the
platform to implement screening and
testing procedures to weed out
advertisers that cheat gamers and
developers. This provision will help
ensure Tapjoy takes more responsibility
for fraud, rather than facilitating it.10
Gaming Gatekeepers and Trickle-Down
Abuse
Tapjoy is not the only platform
squeezing developers. In fact, the firm is
a minnow next to the gatekeeping
whales of the mobile gaming industry,
Apple and Google. By controlling the
dominant app stores, these firms enjoy
vast power to impose taxes and
regulations on the mobile gaming
industry, which was generating nearly
$70 billion annually even before the
pandemic.11
We should all be concerned that
gatekeepers can harm developers and
squelch innovation. The clearest
example is rent extraction: Apple and
Google charge mobile app developers on
their platforms up to 30 percent of sales,
and even bar developers from trying to
avoid this tax through offering
alternative payment systems.12 While
larger gaming companies are pursuing
legal action against these practices,
developers and small businesses risk
severe retaliation for speaking up,
including outright suspension from app
stores—an effective death sentence.13
This market structure also has
cascading effects on gamers and
consumers. Under heavy taxation by
Apple and Google, developers have
been forced to adopt alternative
monetization models that rely on
9 The Commission’s proposed complaint charges
Tapjoy with deception, but fails to include a charge
of unfairness. However, the settlement includes
injunctive relief that addresses Tapjoy’s failure to
police fraud.
10 I respectfully disagree with the proposed order
provision requiring Tapjoy to disclose that
advertisers are responsible for issuing rewards. This
disclaimer undermines the goal of ensuring that
Tapjoy takes adequate responsibility for its business
partners’ practices.
11 See Omer Kaplan, Mobile gaming is a $68.5
billion global business, and investors are buying in,
TechCrunch (Aug. 22, 2019), https://
techcrunch.com/2019/08/22/mobile-gaming-mintsmoney/.
12 See Staff of H. Comm. On the Judiciary, 116th
Cong., Investigation of Competition in Digital
Markets: Majority Staff Report and
Recommendations at 221 (Google); 339 (Apple).
Although Google allows users to ‘‘sideload’’ apps
from outside the Play Store, it has been alleged that
Google makes this process ‘‘technically complex,
confusing and threatening[.]’’ Id. at 220 (quoting
Epic lawsuit).
13 Developers have alleged retaliatory practices by
both Google and Apple, such as when they have
tried to circumvent these gatekeepers’ preferred
monetization tools. Id. at 222, 348–349.
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surveillance, manipulation, and other
harmful practices.
For example, many developers are
turning to ‘‘loot boxes’’ to squeeze more
revenue out of gamers. These loot boxes
deploy dark patterns and other
deceptions to lure gamers—often
children—into purchasing in-app
rewards of randomly assigned value,
turning videogames into virtual casinos.
As detailed in a recent FTC report, this
addictive phenomenon emerged as a
direct consequence of changing
monetization models in the industry, as
developers increasingly rely on
recurring revenue, such as through inapp purchases, rather than upfront
sales.14
Mobile gaming’s market structure is
also forcing developers to create
revenue streams that are not subject to
app store taxation, including through
intrusive behavioral advertising. Last
year, for example, the FTC brought an
action against Hyperbeard, a developer
of child-directed games charged with
allowing major ad networks to surveil
users—including children—in order to
serve behavioral advertising.15 This type
of conduct violates the Children’s
Online Privacy Protection Act, but
Hyperbeard’s surveillance practices are
not unique. In fact, Google encourages
game developers on its platform to
adopt this monetization model, claiming
‘‘users expect free games.’’ 16
Today’s action against Tapjoy reveals
another monetization model developers
turn to in the face of fees and
restrictions imposed by app stores. By
offering a platform connecting
advertisers, gamers, and game
developers, Tapjoy allows these
developers to generate advertising
revenue that Apple and Google do not
tax. But this monetization model also
creates opportunities for fraud, and the
Commission’s complaint details how
Tapjoy allowed this fraud to fester.
Monitoring the Middlemen
Developers of mobile games deliver
creative content that keeps Americans
entertained and engaged, but face many
middlemen, even beyond the dominant
14 Press Release, Fed. Trade Comm’n, FTC Staff
Issue Perspective Paper on Video Game Loot Boxes
Workshop (Aug. 14, 2020), https://www.ftc.gov/
news-events/press-releases/2020/08/ftc-staff-issueperspective-paper-video-game-loot-boxes-workshop.
15 Press Release, Fed. Trade Comm’n, Developer
of Apps Popular with Children Agrees to Settle FTC
Allegations It Illegally Collected Kids’ Data without
Parental Consent (June 4, 2020), https://
www.ftc.gov/news-events/press-releases/2020/06/
developer-apps-popular-children-agrees-settle-ftcallegations-it.
16 Mobile ads: the key to monetizing gaming apps,
Google AdMob, https://admob.google.com/home/
resources/monetize-mobile-game-with-ads/ (last
visited on Jan. 5, 2021).
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app stores. Game developers relied on
Tapjoy to generate revenue for
themselves and offer gamers a way to
earn currency to enhance their play.
However, Tapjoy’s failure to screen
fraudulent offers left both gamers and
developers holding the bag.
The settlement proposed today should
help reverse the lax policing practices
that led hundreds of thousands of
gamers to file complaints. But when it
comes to addressing the deeper
structural problems in this marketplace
that threaten both gamers and
developers, the Commission will need
to use all of its tools—competition,
consumer protection, and data
protection—to combat middlemen
mischief, including by the largest
gaming gatekeepers.
[FR Doc. 2021–00568 Filed 1–12–21; 8:45 am]
BILLING CODE 6750–01–P
agenda for the January 28, 2021 Web
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In notice document 2020–28152
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make the following correction:
On page 83087, in the first column, in
the DATES section, change ‘‘January 20,
2021’’ to read ‘‘January 21, 2021.’’
[FR Doc. C1–2020–28152 Filed 1–12–21; 8:45 am]
BILLING CODE 1301–00–D
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SUMMARY:
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The Administrator of GSA established
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January 28, 2021 Meeting Agenda
• Updates and introductions
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• Embodied energy task group findings
& recommendations
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[FR Doc. 2021–00515 Filed 1–12–21; 8:45 am]
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Domini Bean, Office of Operations,
Food and Drug Administration, Three
White Flint North, 10A–12M, 11601
Landsdown St., North Bethesda, MD
20852, 301–796–5733, PRAStaff@
fda.hhs.gov.
SUMMARY:
E:\FR\FM\13JAN1.SGM
13JAN1
Agencies
[Federal Register Volume 86, Number 8 (Wednesday, January 13, 2021)]
[Notices]
[Pages 2670-2673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00568]
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FEDERAL TRADE COMMISSION
[File No. 172 3092]
Tapjoy, Inc.; Analysis of Proposed Consent Order to Aid Public
Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices. The attached Analysis of Proposed Consent Order to Aid
Public Comment describes both the allegations in the draft complaint
and the terms of the consent order--embodied in the consent agreement--
that would settle these allegations.
DATES: Comments must be received on or before February 12, 2021.
ADDRESSES: Interested parties may file comments online or on paper by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write ``Tapjoy, Inc.;
File No. 172 3092'' on your comment, and file your comment online at
https://www.regulations.gov by following the instructions on the web-
based form. If you prefer to file your comment on paper, mail your
comment to the following address: Federal Trade Commission, Office of
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D),
Washington, DC 20580, or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Constitution Center,
400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC
20024.
FOR FURTHER INFORMATION CONTACT: Matthew H. Wernz (415-848-5125),
Midwest Regional Office, John C. Kluczynski Federal Building, 230 South
Dearborn Street, Suite 3030, Chicago, IL 60604.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
at https://www.ftc.gov/news-events/commission-actions.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before February 12,
2021. Write ``Tapjoy, Inc.; File No. 172 3092'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the https://www.regulations.gov website.
Due to the COVID-19 pandemic and the agency's heightened security
screening, postal mail addressed to the Commission will be subject to
delay. We strongly encourage you to submit your comments online through
the https://www.regulations.gov website.
If you prefer to file your comment on paper, write ``Tapjoy, Inc.;
File No. 172 3092'' on your comment and on the envelope, and mail your
comment to the following address: Federal Trade Commission, Office of
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D),
Washington, DC 20580; or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Constitution Center,
400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC
20024. If possible, submit your paper comment to the Commission by
courier or overnight service.
Because your comment will be placed on the publicly accessible
website at https://www.regulations.gov, you are solely responsible for
making sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include sensitive
personal information, such as your or anyone else's Social Security
number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2),
16 CFR 4.10(a)(2)--including in particular competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request, and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted on the https://www.regulations.gov website--as legally
[[Page 2671]]
required by FTC Rule 4.9(b)--we cannot redact or remove your comment
from that website, unless you submit a confidentiality request that
meets the requirements for such treatment under FTC Rule 4.9(c), and
the General Counsel grants that request.
Visit the FTC website at https://www.ftc.gov to read this Notice and
the news release describing the proposed settlement. The FTC Act and
other laws that the Commission administers permit the collection of
public comments to consider and use in this proceeding, as appropriate.
The Commission will consider all timely and responsive public comments
that it receives on or before February 12, 2021. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.
Analysis of Proposed Consent Order to Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an agreement containing a consent order from Tapjoy,
Inc. (``Tapjoy''). The proposed consent order has been placed on the
public record for thirty (30) days for receipt of comments from
interested persons. Comments received during this period will become
part of the public record. After 30 days, the Commission will again
review the agreement and the comments received, and will decide whether
it should withdraw from the agreement and take appropriate action or
make final the agreement's proposed order.
Tapjoy operates an advertising platform within mobile gaming
applications. On the platform, Tapjoy promotes offers of in-app rewards
(e.g., virtual currency) to consumers who complete an action, such as
taking a survey or otherwise engaging with third-party advertising. To
induce consumers to engage with third-party advertisers, Tapjoy offers
in-app rewards in the form of a specified amount of virtual currency
that can be used in the in-app games. However, in many instances,
Tapjoy never issued the promised reward to consumers who complete an
action as instructed, or only issued the currency after a substantial
delay. Consumers who attempt to contact Tapjoy to complain about
missing rewards have found it difficult to do so, and even consumers
who have been able to submit a complaint nevertheless did not receive
the promised reward.
The Commission's proposed complaint alleges that Tapjoy has
violated Section 5 of the FTC Act. In particular, the proposed
complaint alleges that Tapjoy has represented that consumers will
receive a reward of virtual currency upon completion of a specific
action when, in many instances, that representation was false,
misleading, or not substantiated at the time the representation was
made.
The proposed order contains injunctive provisions addressing the
alleged deceptive conduct. Part I.A of the proposed order prohibits
Tapjoy from making the misrepresentations alleged in the complaint.
Part I.B requires Tapjoy to make certain disclosures, specifically that
its advertisers determine whether rewards are likely to issue, and when
consumers are likely to receive rewards. Part I.C requires Tapjoy to
obtain specified agreements from the associated advertiser before a
reward is promoted or offered. Part I.D of the proposed order requires
Tapjoy, before a reward is promoted or offered, to obtain the materials
used to promote or offer the reward, to use those materials to attempt
to obtain the reward, to validate the accuracy of those materials, and
to validate that the reward is delivered promptly or that any delay is
disclosed. Part I.E requires Tapjoy to provide a prominently disclosed
and easy-to-use method by which consumers may submit support requests.
Part I.F requires Tapjoy to investigate patterns of customer support
requests or other information indicating that a particular promotion or
offer of a reward has inaccurate instructions or is failing to deliver
the reward.
Parts II through V of the proposed order are reporting and
compliance provisions. Part II requires acknowledgments of the order.
Part III requires Tapjoy to notify the Commission of changes in
corporate status and mandates that the company submit an initial
compliance report to the Commission. Part IV requires the company to
create certain documents relating to its compliance with the order for
10 years and to retain those documents for a 5-year period. Part V
mandates that the company make available to the Commission information
or subsequent compliance reports, as requested.
Finally, Part VI states that the proposed order will remain in
effect for 20 years, with certain exceptions.
The purpose of this analysis is to aid public comment on the
proposed order. It is not intended to constitute an official
interpretation of the complaint or proposed order, or to modify in any
way the proposed order's terms.
By direction of the Commission.
April J. Tabor,
Acting Secretary.
Statement of Commissioner Rohit Chopra Joined by Commissioner Rebecca
Kelly Slaughter Summary
The explosive growth of mobile gaming has led to mounting
concerns about harmful practices, including unlawful surveillance, dark
patterns, and facilitation of fraud.
Tapjoy's failure to properly police its mobile gaming
advertising platform cheated developers and gamers out of promised
compensation and rewards.
The Commission must closely scrutinize today's gaming
gatekeepers, including app stores and advertising middlemen, to prevent
harm to developers and gamers.
The video game business has solidified its place as a fixture of
America's entertainment industry. During the pandemic, revenues in the
sector have reportedly eclipsed those of the sports and film businesses
combined.\1\ This period has brought about a massive increase in mobile
gaming app installs and spending, cementing gaming as a major magnet
for Americans' attention.\2\ The latest industry offerings rely on
deeper social connectivity features and facilitate content creation by
players. Americans are hosting birthday parties through gaming apps,
and tens of millions have attended concerts by major artists on
Fortnite and Roblox.\3\
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\1\ Ben Gilbert, Video-game industry revenues grew so much
during the pandemic that they reportedly exceeded sports and film
combined, Business Insider (Dec. 23, 2020), https://www.businessinsider.com/video-game-industry-revenues-exceed-sports-and-film-combined-idc-2020-12.
\2\ Robert Williams, Mobile gaming surges as pandemic drives 45%
jump in app installs, Marketing Drive (Dec. 2, 2020), https://www.marketingdive.com/news/mobile-gaming-surges-as-pandemic-drives-45-jump-in-app-installs/591417/. Gaming expert Joost van Dreunen
recently offered helpful analysis about emerging trends in this
growing industry. The Prof G Show with Scott Galloway, Pandemic
Learnings with Dr. Abdul El-Sayed (Dec. 15, 2020), https://westwoodonepodcasts.com/pods/the-prof-g-show-with-scott-galloway/.
\3\ See, e.g., Gil Kaufman, Here's How Many People Tuned Into
Lil Nas X's Roblox Show, Billboard (Nov. 17, 2020), https://www.billboard.com/articles/columns/hip-hop/9485495/lil-nas-x-roblox-show-viewers; see also Joost van Dreunen, The future is user-
generated, SuperJoost Playlist (Nov. 23, 2020), https://superjoost.substack.com/p/the-future-is-user-generated.
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Mobile gaming is the fastest growing segment of the market, where
revenues are primarily generated through in-app purchases and
advertising. Importantly, this segment is characterized by a unique
market structure dominated by new gatekeepers, particularly app stores
[[Page 2672]]
and advertising middlemen. This structure is rightfully under more
intense scrutiny, given the challenges facing developers and the
downstream practices that can harm gamers.
Against this backdrop, the Federal Trade Commission evaluates an
appropriate remedy to address conduct of Tapjoy, a mobile advertising
platform that connects gamers, game developers, and advertisers. As
detailed in the Commission's complaint, Tapjoy's practices allowed
users to be cheated of promised rewards, and developers to be cheated
of promised compensation. The proposed settlement does not remedy these
past harms, but will require Tapjoy to better police its platform to
prevent abuses going forward.\4\
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\4\ This matter is another example where the lack of clarity
regarding the scope of immunities conferred by Section 230 of the
Communications Decency Act has given legal ammunition to platforms
seeking to shirk responsibility for their commercial activity,
including sales and advertising practices. This lack of clarity
undermines the ability of the FTC and other regulators to obtain
adequate monetary relief for misconduct.
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Tapjoy's Middleman Misconduct
Tapjoy is a major mobile advertising platform that acts as a
middleman between advertisers, gamers, and game developers. The
platform woos developers into integrating its technology by promising
payments for user activity. In a mobile gaming experience where
developers use Tapjoy's advertising platform, Tapjoy displays
``offers.'' When gamers complete these ``offers,'' such as by signing
up for subscriptions or making purchases, Tapjoy credits the user's
account with coins or other currency for use in the game, and
developers receive a percentage of Tapjoy's advertising revenue.\5\
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\5\ In other instances, users can receive rewards directly
through the game.
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However, according to the FTC's complaint, many players jumped
through hoops--and even spent money and turned over sensitive data--to
complete Tapjoy's offers, only to receive nothing in return.\6\ It
appears Tapjoy amplified false offers by its business partners, who
baited gamers with big rewards only to cheat them when it was time to
pay up.\7\ Tapjoy did little to clean up the mess, even when hundreds
of thousands of gamers filed complaints.\8\ This also harmed developers
of mobile games, who were cheated of advertising revenue they were
entitled to.
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\6\ Compl. In the Matter of Tapjoy, Inc., ]] 21-29.
\7\ Compl., id. ]] 8, 15-29.
\8\ Compl., id. ]] 30-40.
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In my view, Tapjoy's conduct violated the FTC Act's prohibition on
unfair practices, as well as the prohibition on deceptive practices.\9\
The FTC's proposed settlement requires the platform to implement
screening and testing procedures to weed out advertisers that cheat
gamers and developers. This provision will help ensure Tapjoy takes
more responsibility for fraud, rather than facilitating it.\10\
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\9\ The Commission's proposed complaint charges Tapjoy with
deception, but fails to include a charge of unfairness. However, the
settlement includes injunctive relief that addresses Tapjoy's
failure to police fraud.
\10\ I respectfully disagree with the proposed order provision
requiring Tapjoy to disclose that advertisers are responsible for
issuing rewards. This disclaimer undermines the goal of ensuring
that Tapjoy takes adequate responsibility for its business partners'
practices.
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Gaming Gatekeepers and Trickle-Down Abuse
Tapjoy is not the only platform squeezing developers. In fact, the
firm is a minnow next to the gatekeeping whales of the mobile gaming
industry, Apple and Google. By controlling the dominant app stores,
these firms enjoy vast power to impose taxes and regulations on the
mobile gaming industry, which was generating nearly $70 billion
annually even before the pandemic.\11\
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\11\ See Omer Kaplan, Mobile gaming is a $68.5 billion global
business, and investors are buying in, TechCrunch (Aug. 22, 2019),
https://techcrunch.com/2019/08/22/mobile-gaming-mints-money/.
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We should all be concerned that gatekeepers can harm developers and
squelch innovation. The clearest example is rent extraction: Apple and
Google charge mobile app developers on their platforms up to 30 percent
of sales, and even bar developers from trying to avoid this tax through
offering alternative payment systems.\12\ While larger gaming companies
are pursuing legal action against these practices, developers and small
businesses risk severe retaliation for speaking up, including outright
suspension from app stores--an effective death sentence.\13\
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\12\ See Staff of H. Comm. On the Judiciary, 116th Cong.,
Investigation of Competition in Digital Markets: Majority Staff
Report and Recommendations at 221 (Google); 339 (Apple). Although
Google allows users to ``sideload'' apps from outside the Play
Store, it has been alleged that Google makes this process
``technically complex, confusing and threatening[.]'' Id. at 220
(quoting Epic lawsuit).
\13\ Developers have alleged retaliatory practices by both
Google and Apple, such as when they have tried to circumvent these
gatekeepers' preferred monetization tools. Id. at 222, 348-349.
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This market structure also has cascading effects on gamers and
consumers. Under heavy taxation by Apple and Google, developers have
been forced to adopt alternative monetization models that rely on
surveillance, manipulation, and other harmful practices.
For example, many developers are turning to ``loot boxes'' to
squeeze more revenue out of gamers. These loot boxes deploy dark
patterns and other deceptions to lure gamers--often children--into
purchasing in-app rewards of randomly assigned value, turning
videogames into virtual casinos. As detailed in a recent FTC report,
this addictive phenomenon emerged as a direct consequence of changing
monetization models in the industry, as developers increasingly rely on
recurring revenue, such as through in-app purchases, rather than
upfront sales.\14\
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\14\ Press Release, Fed. Trade Comm'n, FTC Staff Issue
Perspective Paper on Video Game Loot Boxes Workshop (Aug. 14, 2020),
https://www.ftc.gov/news-events/press-releases/2020/08/ftc-staff-issue-perspective-paper-video-game-loot-boxes-workshop.
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Mobile gaming's market structure is also forcing developers to
create revenue streams that are not subject to app store taxation,
including through intrusive behavioral advertising. Last year, for
example, the FTC brought an action against Hyperbeard, a developer of
child-directed games charged with allowing major ad networks to surveil
users--including children--in order to serve behavioral
advertising.\15\ This type of conduct violates the Children's Online
Privacy Protection Act, but Hyperbeard's surveillance practices are not
unique. In fact, Google encourages game developers on its platform to
adopt this monetization model, claiming ``users expect free games.''
\16\
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\15\ Press Release, Fed. Trade Comm'n, Developer of Apps Popular
with Children Agrees to Settle FTC Allegations It Illegally
Collected Kids' Data without Parental Consent (June 4, 2020),
https://www.ftc.gov/news-events/press-releases/2020/06/developer-apps-popular-children-agrees-settle-ftc-allegations-it.
\16\ Mobile ads: the key to monetizing gaming apps, Google
AdMob, https://admob.google.com/home/resources/monetize-mobile-game-with-ads/ (last visited on Jan. 5, 2021).
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Today's action against Tapjoy reveals another monetization model
developers turn to in the face of fees and restrictions imposed by app
stores. By offering a platform connecting advertisers, gamers, and game
developers, Tapjoy allows these developers to generate advertising
revenue that Apple and Google do not tax. But this monetization model
also creates opportunities for fraud, and the Commission's complaint
details how Tapjoy allowed this fraud to fester.
Monitoring the Middlemen
Developers of mobile games deliver creative content that keeps
Americans entertained and engaged, but face many middlemen, even beyond
the dominant
[[Page 2673]]
app stores. Game developers relied on Tapjoy to generate revenue for
themselves and offer gamers a way to earn currency to enhance their
play. However, Tapjoy's failure to screen fraudulent offers left both
gamers and developers holding the bag.
The settlement proposed today should help reverse the lax policing
practices that led hundreds of thousands of gamers to file complaints.
But when it comes to addressing the deeper structural problems in this
marketplace that threaten both gamers and developers, the Commission
will need to use all of its tools--competition, consumer protection,
and data protection--to combat middlemen mischief, including by the
largest gaming gatekeepers.
[FR Doc. 2021-00568 Filed 1-12-21; 8:45 am]
BILLING CODE 6750-01-P