Google and Apple are in trouble in South Korea as the Korean government has seemingly passed a bill that would ban Apple’s and Google’s app store payment requirements, potentially allowing developers to accept payments through other means. Currently, Apple and Google take up to a 30% commission fee from every in-app purchase made through their stores, but the amendment made in South Korea’s Telecommunications Business Act will stop developers to use in-house payment systems. South Korea’s National Assembly has passed the bill, and President Moon Jae-in is expected to sign the bill to convert it into law.
This is the first time a government has passed a bill to prevent Google and Apple from imposing their own payment terms on in-app purchases. South Korea’s preliminary committee voted on Wednesday, 25 August to proceed with the revised Telecommunication Business Act, attempting to restrict Google and Apple from charging app developers high commission on in-app purchases. The tech giants have been under scrutiny ever since Fortnite was kicked out of App Store about a year ago. Developers have been asking for a change for a long, and even though efforts like links for payment via email and 15% commission for small businesses have satisfied developers a bit, it still does not solve 100% of the problem.
As for consumers, it might mean in-app purchases at a lower cost. Developers charge a high price for, say an ad-free subscription, cause they get only 70% of the money. For example, an app charges $10 per month for removing ads. Even if the developer wants to charge only around $7 for ad removal, he/she will still have to charge $10 since the $3 is taken as App Store commission. If the developer opts for a third-party payment system, the developer may charge $7 cause he/she will still be getting the same amount. In short, you might see lower prices for in-app purchases if this is implemented around the world.
Apple said in its statement, “the proposed Telecommunications Business Act will put users who purchase digital goods from other sources at risk of fraud, undermine their privacy protections, make it difficult to manage their purchases, and features like ‘Ask to Buy’ and Parental Controls will become less effective.”
Apple defends its case by saying the commission fees go into the maintenance of the App Store, making sure all the apps are safe to use for iOS users. However, we’ve seen developers report a number of scams on the App Store in the past few months. It remains to be seen if other countries follow South Korea’s decision and take an action against the Apple-Google duopoly.