The proposed settlement requires Tapjoy to better monitor its platform to prevent further fraud, but does not make whole any past victims.

The complaint against Tapjoy is one window into a larger issue. The statement released by the FTC indicates Apple and Google are some of the biggest gatekeepers in the mobile industry, as they have the power to impose taxes and regulations on games through their storefronts, the App Store and Google Play. The clearest example is rent extraction, as Apple and Google charge up to 30 percent of revenue in exchange for hosting a developer’s game on their respective stores.

“We should all be concerned that gatekeepers can harm developers and squelch innovation.” FTC commissioner Rohit Chopra said in the complaint. “While larger gaming companies are pursuing legal action against [rent extraction] practices, developers and small businesses risk severe retaliation for speaking up, including outright suspension from app stores — an effective death sentence.”

To combat the market structure set by storefronts such as Apple and Google — and advertising middlemen such as Tapjoy — many game developers adopt monetization models that rely on surveillance, manipulation and other harmful practices. Loot boxes are one such example, where gamers purchase in-app rewards of randomly assigned value. The FTC likened the practice to a “virtual casino.”

Developers also create revenue streams to sidestep app store taxation, including intrusive behavior advertising. Hyperbeard, the studio behind children’s games such as Kleptocats and Clawbert, allowed major ad networks to surveil users, without the users’ knowledge, to serve behavioral advertising. The FTC filed a complaint against Hyperbeard for violating the Children’s Online Privacy Protection Act, with the developer settling in June at an $150,000 payment.

Tapjoy did not immediately respond for comment.

Photo of Rohit Chopra courtesy of Federal Trade Commission – 2018 Casmoe Photography