What you need to know
- A new South Korean bill looks set to bar Google and Apple from imposing their in-app payment systems on developers.
- The regulatory move poses a threat to the tech giants' key revenue stream.
- Legislators are expected to vote on the new legislation on Wednesday.
Google and Apple's in-app payment systems for developers in South Korea may soon come to an end. The country's legislators are expected to give their final verdict on Wednesday for a new bill that seeks to stop the tech giants from forcing developers to obey their respective in-app purchase policies, as per Reuters.
The new legislation is an amendment to the "Anti-Google law," officially known as the Telecommunications Business Act. If approved, the legislation will curb one of Google's major revenue streams, banning it from taking a 30% cut from in-app purchases made on some of the best Android apps. This means developers will have the freedom to use other payment systems outside of Google and Apple's ecosystems once the bill passes into law.
Currently, app developers who use the Play Store or App Store are required to use both companies' in-app payment systems for digital transactions made on both marketplaces. This practice has sparked criticisms against the tech giants due to its "draconian" nature.
Earlier this month, U.S. senators have proposed a bill meant to ease the tight control they believe Apple and Google exert on the app market. The bill's proponents said the companies maintain a level of control over their respective app stores that lets them "exclusively dictate the terms of the app market, inhibiting competition and restricting consumer choice."
Last year, Australia also launched an investigation into the mobile app market in the country that covered both the App Store and Play Store. The latest legislation in South Korea marks another major regulatory move against Google and Apple for their app marketplace practices.
Google was not immediately available to comment.
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If this catches on, I expect there will be some other way for Google/Apple to make money. I don't want to argue how much maintaining the app stores costs, but it should be obvious it costs Apple and Google to maintain them. They do 'vet' the apps, provide the space on severs, keep the store UI functioning, provide the bandwidth for upload and download. Currently they also manage updates and such.
If third party payment systems are enforced, that would eliminate any revenue from an app sale for Apple or Google. Sure, not every developer will go for their own, but a lot of the big ones (Epic) will. The stores can't operate on nothing, so Apple and Google will likely find some other avenue for 'their cut'. To me the simplest would be, you can use any payment processing system you want, but we will be charging you, developer, by download. Oh, and updates and IAP downloads count too. You have 100 downloads of your 99 cent app, you owe us $33. Had you used our 'processing system' this would have cost you $29.70, but hey, your choice. You can always create your own web site, marketing, distribution and payment system. I get this doesn't completely work for Apple right now, as the don't allow sideloading, but for Google, this would be a solution.
The reason this got all messy is because some try to argue in bad faith that those platforms only process payments and charging 15 is too much, they should instead charge 2-3%. What they always fail to put into the conversation is all the developer tools, store, uploads/downloads and access those platforms provide. Those things are not free but those folks just want to be able to use all the resources those platforms provide without paying for any of it. Those platforms pick the current options because it was the simplest and easiest way for them to process everything and get paid. What we will see instead is Google and Apple will start breaking out and charging for everything they offer, like API access, developer tools, bandwidth, app updates, international appstore access etc... free apps will be a thing of the pass and will squeeze out indie and small developers. The platform owners will get their money no matter what, it will simply create more work (for both - platforms/developers) with little to no gain. The only way to avoid not paying those platform owners is to not be on their platforms, simple.
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