While Apple was eventually forced into settling for $32.5 million in customer reimbursements during a similar investigation launched by the FTC last year, it seems Amazon isn't interested in paying out for unauthorized purchases on its own Appstore, and the FTC isn't taking it lying down.
Today, the de facto consumer protection agency in the US filed a federal lawsuit against Amazon under the wide-reaching FTC Act's section 45, which prohibits "unfair or deceptive acts or practices in or affecting commerce." Yes, that is a law. Proving a cause of action under this statute requires the following:
Acts or practices are unfair under Section 5 of the FTC Act if they cause or are likely to cause substantial injury to consumers that consumers themselves cannot reasonably avoid and that is not outweighed by countervailing benefits to consumers or competition.
Essentially, the FTC Act gives the FTC authority to file a lawsuit against business for engaging in behavior that is injurious to consumers while also difficult for said consumers to avoid. The balancing factors are those of competition and benefits to the consumer. In this particular case, Amazon's defenses on those counterpoints is almost inarguably weak - extra safeguards against unauthorized purchases on the Appstore won't harm competition in any measurable sense, and it's not likely they can be said to outweigh the benefits of a faster purchasing process for consumers.
Why, then, is Amazon taking the FTC to task on an issue Apple and Google have already been targeted for, and sought to address with such safeguards?
Lest we forget, Amazon is the owner of a patent on the "1-Click Purchase." Amazon founder Jeff Bezos has made impulse-buying a company directive at Amazon, allowing consumers to get the things they want as quickly as humanly possible, with as little interaction needed from the consumer as possible. The FTC is saying, essentially, "you can't do that on an app store, because kids could buy things without their parents' permission." The FTC's evidence is allegedly millions of dollars in complaints from parents about Appstore purchases made by children without their consent.
This is likely a battle of principle for Amazon, a company that has made its name on fast, easy, online shopping with cutthroat-competitive pricing and an obsession with instant gratification. They will likely draw heavily on analogies from their own physical goods website, where sign-in is not required if 1-Click purchasing is enabled, even on big-ticket items. The same goes for the Kindle store.
The FTC will probably argue that the Appstore, unlike Kindle or Amazon.com, is especially likely to see engagement from children, who have comparatively little use (or more perceived risk) for a physical goods site or, sadly, books. Buying extra lives in Candy Crush Saga is a credit card blip that may go unnoticed for months, until it adds up, and children are obviously less likely to understand the financial implications of microtransactions when they're used repeatedly over long periods.
Who's going to win? Well, my money's on the FTC - but I seriously doubt Amazon's going to let this go without a fight. The company's principles are directly at odds with the FTC here, and they're probably going to make a stink about it, justified or not.