Italy's Antitrust and Competition Authority is investigating Google, Apple and Amazon and Gameloft for a possible violation of unfair commercial practices due to "freemium" games.
"Freemium" games are games that are free to download and play. However, they offer in-app purchases which give the user different advantages when purchased with real money, depending on the kind of game. In-app purchases in racing games can unlock faster engines, while those in fighting games can give you a power boost for the next match. Some "freemium" games allow you to play the first chapter of the game for free, but to continue with the succeeding chapters, you will have to purchase them.
The Italian antitrust body investigates whether a game can be advertised as free when the user is required to pay for in-app purchases to continue or to unlock the app's full functionality. A spokeswoman for the authority said that the investigation is expected to last eight months, with the companies facing a possible fine of US$6.9 million each.
"Consumers could wrongly believe that the game is entirely free and, in any case, that they would know in advance the full costs of the game. Moreover, insufficient information seems to be provided to consumers about the settings needed to stop or limit the purchases within the app," the antitrust watchdog said.
Gameloft is not the only game developer that is using the "freemium" model for their apps. Glu, Gamevil, Electronic Arts and Rovio have also released free games that rely on in-app purchases.
The investigation is similar to one that was carried out by the European Commission in February earlier this year, which requested companies to change the rules on how their apps are advertised as free downloads when they would require purchases later on. The purchases, by default, are charged to the credit cards of the users.
As per the Commission, over half of the available mobile games in the European Union are advertised as free downloads, with the users, especially children, not aware of the possible costs that they can incur by downloading these supposedly free games.
"Consumers and in particular children need better protection against unexpected costs from in-app purchases. National enforcement authorities and the European Commission are discussing with industry how to address this issue which not only causes financial harm to consumers but can also put at stake the credibility of this very promising market. Coming up with concrete solutions as soon as possible will be a win-win for all," said Commissioner Neven Mimica, who is responsible for Consumer Policy.
