Apple, Google in Trouble for Advertising Games With In-App Purchases as Free

U.S. tech giants Apple, Google and Amazon and French game developer Gameloft are under investigation in Italy for alleged unfair commercial practices, the country's antitrust and competition authority said.

The investigation will determine whether the four companies are misleading customers by advertising mobile game apps as free, when in fact purchases are required to continue playing beyond a certain point, the regulator said in a statement.

"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," the antitrust watchdog said.

"Moreover, insufficient information seems to be provided to consumers about the settings needed to stop or limit the purchases within the app."

Apple declined to comment while Gameloft said it was looking into the issue but had no other comment. Google and Amazon could not immediately be reached for a reaction.

A spokeswoman at the authority said the investigation would likely be concluded within seven to eight months. The maximum fine it could impose on each of the companies would be 5 million euros ($6.9 million), she added.

The investigation follows a similar move by the European Commission earlier this year which asked companies to revise their rules on apps that are advertised as free and can be downloaded at no cost, but which later require purchases that get charged to consumers' credit cards by default.

(Also see: Top EU official is no fan of 'freemium' model, in-app purchases)

According to the Commission, more than half of the mobile games available in the European Union are advertised as free downloads, and consumers, especially children, are not always aware of costs that can be incurred and are vulnerable to the misleading marketing.

© Thomson Reuters 2014