406150The FTC has amended the 1998 Child Online Privacy Protection Act to include provisions making it illegal via a mobile app to knowingly collect geolocation, photographs and videos from minors younger than 13 without a parent or guardian’s permission. The Biederman Blog recently reported on FTC concerns about inadequate protections for child privacy with apps for kids. Now there’s more clarity on the regulatory front for technology, entertainment and media companies on what’s permissible with these child-oriented products. The story has generated headlines, and rightfully, so considering parental concerns about their kids’ protection and the lucrative nature of apps for kids.

While Hollywood has huge interest in the app biz — and even though the giants in the business  may covet the revenue, traffic and eyeballs, including and especially for kids — the industry doesn’t fund development: small start-ups carry through much of the hard, early slog and they must  demonstrate to major players a level of proficiency before they get snapped up as the next cool. Problem is they lack resources that are second-nature to studios to deal with legal and other concerns in the development phase. So developers are bristling at the feds moves to protect kids.

Might the new regulations undercut app development for kids? Or is this small hurdle that developers can overcome with clever code? A recent Associated Press story reports on a devloper who considered innovating his 99 cent app, “Stack the States,” and making it so kids could compete head to head. He says he won’t even pursue that notions because it entails all kinds of data sharing and he’s afraid to do it.

The FTC has sanctioned app developers for noncompliance and wrongfully collecting information from kids already.  The AP report predates the regulators’ changes. The story says start-ups will face increased costs to comply with privacy regulations.

It appears the latest changes do not affect routine transfers of data. Privacy watchdogs have expressed optimism that the rules are workable and strike the right balance to protect youngsters’ privacy while not inhibiting business in kids’ apps, where innovations occur swiftly.

It’s also worth noting who won’t have increased regulatory issues when stricter regulations take effect in July, 2013: distributors, like Apple (The App Store), Google (Google Play) and Microsoft (Windows Phone Store).  Other federal rules carve out exceptions, too, for a we portal or web site that doesn’t actually create or post the content. To some legal eyes this is akin to how the Communications Decency Act grants immunity to mere providers of an interactive computer service without any requirement to take down material that may be deemed to be libel or slander.

As cell phone ownership and app technology grow and becomes even more ubiquitous, there likely also will be new challenges for the FTC in protecting kids and the public at large.  The issue of third-party data collection was quashed for the moment as mobileburn.com reports that the recent agency amendment also closed a loophole allowing mobile apps and websites to permit third-parties to collect personal information from kids without notifying or obtaining the consent of parents.