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Software trade braces for phone apps rules

The software industry is bracing for new FTC regulations that it says will stifle creativity and saddle small businesses with legal and technical costs to ensure their cellphone apps don't run afoul of the rules.
By RICHARD LARDNER Published: December 19, 2012
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/articleid/3738809/1/pictures/1910858">Photo - Dan Russell-Pinson demonstrates his iPad app in his office at his home in Charlotte, N.C., Saturday, Dec. 15, 2012. Russell-Pinson, like many apps developers, is concerned that soon-to-be-issued federal rules intended to strengthen online privacy protection for children will cost him money and curb innovation in an industry that thrives on it. (AP Photo/Chuck Burton)
Dan Russell-Pinson demonstrates his iPad app in his office at his home in Charlotte, N.C., Saturday, Dec. 15, 2012. Russell-Pinson, like many apps developers, is concerned that soon-to-be-issued federal rules intended to strengthen online privacy protection for children will cost him money and curb innovation in an industry that thrives on it. (AP Photo/Chuck Burton)

An outlay of several thousand dollars to design the required privacy policy for an app is small change for larger, established companies. But for the bulk of developers, that's a lot of money. Most have only a few employees and operate on tight profit margins, Reed said.

The FTC has imposed steep fines on companies that have violated the current law, the 1998 Children's Online Privacy Protection Act. In 2011, a mobile apps developer, W3 Innovations, paid $50,000 to settle charges it illegally collected and stored the email addresses of preteens that downloaded apps called “Emily's Girl World” and “Emily's Dress Up.”

The co-founder of Launchpad Toys in San Francisco, Andy Russell, said he adheres to the current law but his apps business isn't yet profitable.

“I can't speak for other developers, but I think there are a lot of people out there who would say: ‘You know what ...I'm just going to fold up shop,'” he said.


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