Statement of Commissioner Maureen K. Ohlhausen 

In Re Apple Inc., No. 122-3108 

January 15, 2014 

I voted to accept for public comment the accompanying proposed 

administrative complaint and consent order, settling allegations that Apple Inc. 

engaged in unfair acts or practices by billing iTunes account holders for charges 

incurred by children in apps that are likely to be used by children without the 

account holders’ express informed consent.1

 I write separately to emphasize that 

our action today is consistent with the fundamental principle that any commercial 

entity, before billing customers, has an obligation to notify such customers of what 

they may be charged for and when, a principle that applies even to reputable and 

highly successful companies that offer many popular products and services. 

In his dissent, Commissioner Wright lauds the iterative software design 

process of rapid prototyping, release, and revision based on market feedback; this 

approach has proven to be one of the most successful methods for balancing design 

tradeoffs. He also notes that it can be difficult to forecast problems that may arise 

with complicated products across millions of users and expresses concern that our 

decision today requires companies to anticipate and fix all such problems in 

advance. 

I agree with Commissioner Wright that we should avoid actions that would 

chill an iterative approach to software development or that would unduly burden 

the creation of complex products by imposing an obligation to foresee all problems 

that may arise in a widely-used product.2

 I do not believe, however, that today’s 

 

1

 For the reasons given in the Statement of Chairwoman Ramirez and Commissioner Brill, I believe the complaint 

meets the requirements of 15 U.S.C. § 45(n) and the Commission’s Unfairness Statement. 

2

 I am concerned about any action that this agency takes that is likely to have adverse effects on firms’ incentives to 

innovate. For example, in the antitrust context, I voted against the Commission’s complaints in Bosch and

Google/MMI based in significant part on my concern that those enforcement actions would hamper intellectual 

property rights and innovation more generally. See In re Motorola Mobility LLC & Google Inc., FTC File No. 121-
2 

action implicates such concerns. First, Apple’s iterative approach was not the 

cause of the harm the complaint challenges. In fact, Apple’s iterative approach 

should have made it easier for the company to update its design in the face of 

heavy consumer complaints. Second, we are not penalizing Apple for failing to 

have anticipated every potential issue in its complex platform.3

 The complaint 

challenges only one billing issue of which Apple became well aware but failed to 

address in subsequent design iterations. By March 2011, consumers had submitted 

more than ten thousand complaints to Apple stating that its billing platform for inapp purchases for children’s apps was failing to inform them about what they were 

being billed for and when. Although Apple adjusted certain screens in response 

and offered refunds, it still failed to notify account holders that by entering their 

password they were initiating a fifteen-minute window during which children 

using the app could incur charges without further action by the account holder. 

Even if Apple chose to forgo providing this information—the type of information 

that is critical for any billing platform, no matter how innovative, to provide—in 

favor of what it believed was a smoother user experience for some users, the result 

was unfair to the thousands of consumers who subsequently experienced 

unauthorized in-app charges totaling millions of dollars.4

Commissioner Wright also argues that under our unfairness authority 

“substantiality is analyzed relative to the magnitude of any offsetting benefits,”5

 0120, Dissenting Statement of Commissioner Maureen K. Ohlhausen (Jan. 3, 2013), available at

http://www ftc.gov/sites/default/files/documents/cases/2013/01/130103googlemotorolaohlhausenstmt.pdf; In re

Robert Bosch GmbH, FTC File No. 121-0081, Statement of Commissioner Maureen K. Ohlhausen (Nov. 26, 2012), 

available at http://www ftc.gov/sites/default/files/documents/cases/2013/04/121126boschohlhausenstatement.pdf. 

3

 The complaint challenges harm that occurred since March 2011, after Apple changed its process to require the 

entry of the account holder’s iTunes password before incurring any in-app charges immediately after installation. 

Previously, the entry of the password to install an app also opened a fifteen-minute window during which charges 

could be incurred without again entering a password. 

4

 It is also important to note that the Commission’s proposed order does not prohibit the use of the fifteen-minute 

window nor require that the account holder input a password for each purchase. 

5

 Dissenting Statement of Commissioner Joshua D. Wright at 5. 
3 

and concludes that compared to Apple’s total sales or in-app sales, injury was not 

substantial and that any injury that did occur is outweighed by the benefits to 

consumers and competition of Apple’s overall platform. The relevant statutory 

provision focuses on the substantial injury caused by an individual act or practice, 

which we must then weigh against countervailing benefits to consumers or 

competition from that act or practice.6

 Thus, we first examine whether the harm 

caused by the practice of not clearly disclosing the fifteen-minute purchase 

window is substantial and then compare that harm to any benefits from that 

particular practice, namely the benefits to consumers and competition of not 

having a clear and conspicuous disclosure of the fifteen-minute billing window. It 

is not appropriate, however, to compare the injury caused by Apple’s lack of clear 

disclosure with the benefits of the entire Apple mobile device ecosystem. To do so 

implies that all of the benefits of Apple products are contingent on Apple’s 

decision not to provide a clear disclosure of the fifteen-minute purchase window 

for in-app purchases. Such an approach would skew the balancing test for 

unfairness and improperly compare injury “oranges” from an individual practice 

with overall “Apple” ecosystem benefits. 

 

 

6

 “The Commission shall have no authority under this section or section 57a of this title to declare unlawful an act or 

practice on the grounds that such act or practice is unfair unless the act or practice causes or is likely to cause 

substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by 

countervailing benefits to consumers or to competition.” 15 U.S.C. § 45(n).