South Korea is on its way to being the first country to legislate open app store payments
South Korea has been working towards putting an end to exclusive payment terms on the app stores. They are one step closer to making this a reality as the bill is on its way to becoming a law. This will be a substantial economic blow to Google and Apple.
If the bill is approved by the National Assembly in South Korea this week, it will force both companies to let developers use other third-party payment systems on the Play Store and the App Store. Effectively, it threatens the large cut, between 15% and 30%, taken on each digital purchase.
So far, the Wall Street Journal has reported that the bill has received an astounding amount of support. Currently, 180 out of 188 legislators have shown their support for the bill, and it will be signed into law by President Moon Jae-in.
The bill includes a very stiff penalty for anyone that does not comply. This penalty would be seizing 3% of the total income from that company. If we put this into perspective, last year, Google reported revenue of 220.14 billion won, a 3% penalty on this amount would be 6.6 billion won (approximately $5.7 million).
Google has recently responded to the bill's passage and stated that forcing it to allow third-party payment systems could threaten the Android platform's free price. However, the tech giant was recorded saying that they would reflect on how to comply with the new law. At least this indicates some willingness to look into requirements.
Google and Apple just can't escape the scrutiny they are under surrounding their rules on the respective app stores. This new bill in South Korea and even Australia has called for significant changes to the app stores models to ensure fair competition.
In the United States, Google is being sued by multiple state attorneys general for antitrust behavior. Not to mention the Open Markets Act that the US Senate is also considering. And finally, the one that started it all, the civil lawsuit battle between Epic Gaming, Google, and Apple. This continuing lawsuit is airing some of Google's dirty laundry regarding app store practices - and it's not flattering.
If this bill gets signed into law in South Korea, then this would be the most dramatic action taken worldwide. It will force Google and Apple to treat the Play Store similar to the wider internet. Google would still be able to make profits from its integrated services. However, this will give developers with larger apps and resources such as Amazon, Netflix, and Epic a chance to cut out the middleman.
Closing words
This is the most aggressive action from a country against the Google and Apple app stores. However, there is no denying that it would weaken the stranglehold on mobile monetization. I look forward to seeing what the future holds for the app stores.
Good, and certainly an affront to other countries; Korea is first in these matters.
>This will be a substantial economic blow to Google and Apple.
not really, the 30% cut is part of the developer agreement to publish inside the App Store and Google play.
IAP is simply a convenient way to keep track and take the cut.
all this change will do is cause Apple and Google to add the right to perform audits and force the developers to report their income.
similar to how Epic handles things with unreal engine.
I simply do not get how this is a win for anyone, other than the payment processors.
You mean Samsungland lol. Korean goverment of course wants to protect Samsung Pay. But I think this will eventually apply worldwide. Then Apple and Google will start charging… rent to have commercial apps to their stores. Like in a mall you pay rent for the shop you have there. And they will discount 90% in rent for apps that use their pay methods.
“6.6 billion won (approximately $5.7 million).”
How is 6.6 billion approximately 5.7 million?
6.6 billion won is approximately 5.7 million dollar.
different currencies have different values.