Mobile Apps Market Making Moves for U.S. Economy

Notwithstanding the rest of the U.S. economy, experts believe the trajectory of growth in the mobile application (“app”) industry will reach new heights over the next five years.

A recent Application Developers Alliance study concluded that app-capable devices such as the iPad, iPhone, Android, and Kindle Fire are rapidly gaining popularity: 62% of the U.S. online population owns such a device and 74% of device owners regularly download apps.

Since emerging in 2007, the young app industry could revitalize the national economy.  This $20 billion industry—estimated to reach a size of $100 billion by 2015—provides an opportunity for small and large businesses to have a piece of the pie.  The apps market is unusually kind to new entrants and, according to a report by the analytics firm Flurry, participants from the top 100 app developers down to the growing number of niche developers are all generating more revenue than ever before.

These small and large businesses generate millions of apps, including thousands of jobs for programmers, designers, marketers, and other professionals. It is estimated that within just the past four years the app industry generated between 400,000 and 600,000 jobs—an encouraging statistic for a nation suffering from an 8% unemployment rate.

Unfortunately, the industry’s potential to create jobs and improve the economy is threatened by the knee-jerk reaction to regulate apps in response to privacy concerns. While privacy concerns are valid, the urge to regulate the industry is often driven by misrepresentation of the app development process and underestimation of app developers’ ability to respond to consumers’ concerns. Mobile app developers are working to educate the public on the “data design step”—how they determine what information to collect and for how long. During this process, individuals’ information is distilled into a ‘set of preferences’ and immediately aggregated into a ‘bucket’ with users who share those preferences, thereby providing a buffer and anonymity. Actions like this show that app developers recognize that creating a successful app depends in large part on responsibly retaining the least amount of consumer information and respecting consumers’ privacy preferences.

Today, successful app developers cannot disregard consumer preferences because Americans actively safeguard their personal information. According to a September study by the Pew Research Center, 50% of Americans who use smartphone apps decided not to install apps that demanded too much personal information; a third of those surveyed removed apps that collected information users “didn’t wish to share.” This demonstrates consumers are fully aware of the tradeoff between privacy and convenience and, as a result, mobile applications that collect and retain personal information irresponsibly will fail.  As digital privacy awareness develops, consumers should determine how to share their personal information—not the government.

The app economy is revolutionary both in its unprecedented growth and pace of development. Policymakers should harness the sector’s potential to get the economy moving in the right direction, which will require action to stave off burdensome regulations that would encumber mobile apps development and deaden the lively industry.

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