“Apps” for smartphones have exploded over the last few years, heralded by the success of the iPhone and iPad and growing with the increasing use of Android, Windows Phone 7, and new tablets in addition to Apple’s iPad. It’s a billion dollar industry that shows no sign of stopping. We are quickly approaching a time when the majority of Internet use will take place on a smartphone or tablet, and apps will be a central part of that experience. The user experience is key, and it quickly spreads via ratings and word-of-mouth. Google recently pulled its native Gmail app for the iPhone within hours of releasing it due to problems in the user experience. Error screens are app killers.

Apps are relatively new inventions, but old laws still apply. The Federal Trade Commission has stepped up its evaluation and review of apps to ensure that the developers are not violating privacy laws, making false promises, or otherwise engaging in questionable actions. They are evaluating apps the same way they would any other consumer product, but app creators might not be thinking about the intricacies of consumer protection laws. Recently, the FTC targeted two companies that sold so-called “acne buster” apps which claimed to use light from the iPhone’s LED light and display to eliminate acne. The FTC did not want the companies making medical claims that weren’t backed by science. Although this might be an extreme case, it shows that the FTC is paying attention and all app creators should be aware of the scrutiny.

The FTC has also recently extended laws and regulations concerning children and the Internet to mobile apps. The FTC recently settled a complaint against an app developer with a $50,000 penalty alleging that the app developer was collecting information from children it shouldn’t under the existing regulations. In doing so, the FTC claimed that mobile apps use the Internet and, therefore, fall under the Internet regulations. Expect the FTC to continue to keep a close eye on apps directed at children. The FTC is also looking to revise these regulations to rework how websites, and now apps, may obtain parental consent and what information can be collected from children.

Lawmakers in Congress have increasingly found reasons to pay attention to apps as well. Over the last year, apps designed to provide locations of DUI checkpoints were pulled from Research in Motion’s Blackberry app store and Apple’s app store when several Senators sent letters complaining about the apps. Google on the other hand declined to pull the apps. Recently, similar complaints about so-called “stalker apps” have been raised by members of Congress because those apps could be used to track persons who haven’t agreed to be tracked. Certain apps might help you find a lost smartphone, but could also be used to find a person’s location with that smartphone. Other app creators should be aware that Congress is paying attention too.

Privacy concerns will continue to dominate the conversation in Congress about apps because of the inherent tension created when a search engine, app, or other mobile service needs certain information to provide a better experience. Some of that information will be personal. For example, when you want to use your smartphone to find the coffee shop around the corner, you must reveal your location to do so effectively. The chain of mobile companies, from Apple to the smallest app creator, will need to be increasingly concerned with disclosure and permissions when using location and other information to provide better products. New privacy laws are currently being debated, and, if passed, will undoubtedly have an impact on apps.

There’s no question that apps will continue to drive the mobile ecosystem, and new stories will continue to pop up about them. App creators need to be smart about privacy and other laws when they develop and release a new app. New apps may find themselves under the microscope if they aren’t careful about old laws.

For further information, contact Jason Koslofsky or any of the Attorneys in our Group: