08 October 2012


'App Law within: Rights and Regulation in the Smartphone Age' (Edinburgh School of Law Research Paper No. 2012/22) by Daithi Mac Sithigh assesses the regulation of smartphone 'app stores.'
At the outset, the adoption of smartphones and apps is noted, alongside the ways in which scholars and journalists have used these markets as the basis for the discussion of legal and economic issues. The importance (commercially and as a study in governance and control) of the iOS App Store (Apple) is highlighted. Part 2 deals with the relationship between Apple and app developers; three themes of Apple’s Guidelines are identified (content, development and payments), and the ways in which control can be challenged (through jailbreaking, ‘web apps’ and regulatory intervention) are scrutinised. Part 3 considers three ways in which apps are already regulated by law: the protection of consumers (particularly through the UK system for 'premium rate services'), user privacy, and (in brief) the regulation of video games and video-on-demand services in Europe. Finally, in part 4, the tension between comparatively 'open and 'closed' app stores is highlighted; the problems of applying general provisions to emerging formats are emphasised. It is concluded that the emerging status of non-carrier app stores as neither retailer nor platform means that it is not yet possible to identify the form of regulation that is in operation, but that some steps are available to legislators that could shift the balance between closed and open models.
The author concludes -
The relationship between developers and the platform operator may ultimately be judged by what it is compared with. This is not surprising, as the user experience of an app store is somewhere between that of a host like YouTube (where you can visit one site and browse and choose from a range of content uploaded by third parties who bear primarily responsibility for it) and a retailer like WalMart (where the options are determined by WalMart but primarily manufactured by third parties who deal with WalMart and not the end user). In terms of liability, though, retail and host models are far apart. In the case of the developer, those involved in the mainstream games industry will have plenty of experience of approval processes, such as those utilised by Nintendo, which for many years refused approval to games that did not match the image it wished to present of the family-friendly Nintendo consoles. But those who are more accustomed to working through hosts, where there is unlikely to be pre-approval and subsequent scrutiny with a lighter touch (particularly if the liability regime does not require hosts to intervene in order to protect immunity from legal action), will naturally struggle with the type of supplier-retailer relationships that farmers supplying milk to supermarkets are more than familiar with. Of course, both paradigms are strongly influenced by the applicable legal arrangements, including specific, sectoral regulation as well as general principles of inter alia competition law.
This problem, while making the formulation of recommendations difficult, does remind us that main theme in the analysis of the governance model of the iPhone app store is tied to the iPhone’s designation as, in Zittrain’s terms, a tethered device. In contrast, while not quite the exemplar of generativity, alternatives such as the Android platform are less tethered, but allegedly suffer from problems in relation to fraud and abuse. However, this analysis can only ever describe a particular point in time, and is inherently unstable. This is shown by the emerging criticism of quality control of the iOS App Store, which Business Week called ‘anarchy in the App Store’. The argument is that recent problems in relation to the App Store is a consequence of its popularity and the existence of competition: ‘as the Apple Store has grown to include more than 600,000 apps, and with Apple facing pressure from Google and Android, some worry that the company is becoming less vigilant about monitoring app developers, exposing users to unnecessary risks and shoddy apps’. If the closed platform turns out to be risky after all, then the trade-off does not operate, at least from the point of view of the consumer, and indeed certain developers. The result would be either a higher baseline of risk (i.e. all users are exposed to a certain amount of risk), or a reaction from the platform operator that makes it even more closed than before (i.e. tighter rules to restore user and consumer confidence). The latter may be difficult given the attention that is now paid to Apple’s actions, by regulators, developers, and observers. Being the archetype of non-generativity (or post-generativity) means that those who support generativity or wider concerns of openness will not hesitate to criticise changes in control, as we have seen over the past years.
It has been argued in this article that law has a key role to play in support of Apple’s chosen model, in a number of areas. This can be summarised as three interlocking factors: (1) copyright law (combined with the ability to contract out of a warranty in an enforceable, valid fashion) shores up Apple’s strategy of discouraging jailbreaking, (2) competition and telecommunications law are valid methods of controlling Apple’s actions (albeit not in all circumstance), so the non-exercise of these powers is a factor, and (3) apps themselves are not beyond the law, meaning that app stores are not truly free markets, although there is a certain lack of consistency regarding which legal provisions apply.
An alternative strategy for regulation can therefore be posited. To understand it, we must revisit Zittrain’s dichotomy of open and closed systems. There is an aspect of this debate which can be readily and legitimately manipulated by public authorities, namely user rights. Although less apparent in the United States, the focus of Zittrain’s work, a European perspective makes the position clearer. The extensive legislative schemes for data protection and consumer rights in the EU (both founded on the need to harmonise law in the internal market but increasingly justified and developed as legislative vindication of fundamental rights) reduce the risk to the user. By doing so, the stark choice between closed and open platforms can become a less crucial one. Where user rights exist, developers are not completely free to develop any app (as legal requirements must be complied with), so the theoretical concept of generativity is a direction rather than an observable state in any event. However, developers (even where few legal requirements apply) are already accustomed to dealing with regulation, just through Apple rather than public authorities.
Nonetheless, this solution would depend on the nature of consumer and privacy laws that are in place. It is not just the appreciable legal wrongs of misleading the consumer as to the nature of a particular charge that may be alleged to be associated with an open platform; non-legal issues (such as stability) and issues difficult to prohibit even if proscribed (such as spam) are also relevant. There is also an appreciable difference between intervention to protect the interests of the consumer (regarding, for example, transparency in billing) and protecting the interests of the developer (which may in turn protect the interests of the consumer through supporting services demanded by users or facilitating competition). In particular, the former may be capable of being justified by reference to the inequality of arms between the platform operator and the end user or the vulnerable position of some consumers, whereas the category of developers includes some who would be considered the ‘equals’ of the operator, such as major social networking services or news providers. The policy argument for including developer concerns (in their own right) within this proposal is restricted by the problem set out above of finding the appropriate comparator, although it is surely the case that future work on ‘creative industries’ and stimulating growth within the software, animation and game sectors should consider these issues in the same way that the allocation of rights or the structure of tax incentives already are. With these words of caution in mind, though, it can still be concluded that an approach of using existing provisions of law, including those borrowed from cognate sectors, to shift the balance between open and closed models and thus the degree of generativity in the smartphone and app sectors, would be legitimate and capable of having a demonstrable impact on the position of the end user.