Policymakers interested in creating more jobs for Americans should let mobile application developers do what they do best, not saddle them with new, burdensome regulatory obligations.
The economic impact of the app economy is substantial. More than two and a half million apps are currently available from the app stores offered by Apple, Blackberry, Google, and Microsoft.
According to the Application Developers Alliance, the app economy has created 519,000 American jobs and is a significant economic driver in states like California, Georgia, Illinois and Texas.
The app economy will continue to grow as more consumers make the switch to smartphones and as millennials who expect more from their phones and social networks continue to enter the workforce.
In 2011, mobile app revenue was nearly $10 billion, but by 2016, it’s expected to be more than $46 billion.
Increasingly, app consumers are able to convert their consumption into production. Use of apps in this new e-conomy translates into paid services and work. Apps like Lyft and Airbnb enable consumers to be chauffeurs and hoteliers.
TaskRabbit matches laborers and painters with construction jobs. EasyShift and Poshmark help people make money by managing company inventory and selling clothing from anywhere.
Policymakers should ask themselves, how do we keep the app economy going? The only obstacles to the app economy are poorly planned and executed government policies.
On July 1, the Federal Trade Commission’s (FTC) revised rules implementing the Children’s Online Privacy Protection Act (COPPA) are scheduled to take effect.
Although much improved over the original drafts, these rules greatly extend COPPA to cover apps, games, and advertising networks, which will be very challenging and costly for app developers to implement.
Without adequate guidance for compliance with the rules, app developers face the prospect of incurring either crippling costs for compliance or civil liability for violating COPPA.
Rather than face this Hobson’s choice, app developers may decide to stop publishing their apps altogether. This would be disastrous as consumers would miss out on new, innovative products and services.
Moreover, other actors — who employ thousands of skilled workers — in the app economy, namely publishers, advertisers, marketers, and providers, would suffer from losing business opportunities that comes with the launch of new apps.
While large app developers may be able to shoulder the burdens imposed by new rules by redesigning their apps’ interfaces and data collection, and hiring armies of lawyers, small app developers face substantial challenges with the new rules.
Although it is easy to envision app development taking place in laboratories on the campuses of large software companies, in reality app developers are often small, startup businesses with just a handful of employees.
Many successful apps get started in a garage or a dorm room, financed by a credit card and a dream. But apps are becoming increasingly expensive to build and market to the public.
App launches are becoming make-or-break moments for developers, and promotional costs can reach millions of dollars. Given the marketplace risks and obstacles they face, app developers are sensitive to policy obstacles that stand in their way.
Policymakers are right to be concerned about job creation. They can do something about it by crafting policies that enable consumers to continue to benefit from the opportunities for tremendous growth and success in the app economy.
John Stephenson is Director of the Communications and Technology Task Force at the American Legislative Exchange Council.
