South Korea ends Apple, Google control of app store payments
The South Korean government has voted to force Apple and Google to accept alternative payment in the App Store, threatening the companies' exclusive commission.
Center: flag of South Korea
As expected, the South Korean plenary vote of the country's National Assembly has backed the Telecommunications Business Act. Apple and Google will no longer be able to require developers to sell apps via the App Store, and pay the companies' commission.
According to the Wall Street Journal, the bill has to now be signed into law by President Moon Jae-in. As well as blocking Apple and Google from exclusively using their own in-app payment systems, the new law will also ban them from unreasonably delaying or deleting apps.
These further conditions are intended to prevent the companies retaliating against app makers who choose to use alternative payment systems.
Should Apple or Google fail to comply with the new law, the government will fine them up to 3% of all of the revenues that the company earns in South Korea, including hardware sales.
"South Korea's new app store law is a significant development in the global fight to bring fairness to the digital economy," said Meghan DiMuzio, Executive Director of the Coalition for App Fairness. "We applaud South Korean lawmakers and President Moon Jae-in for setting an example for the rest of the world to hold app store gatekeepers accountable for their harmful and anti-competitive practices. The Coalition for App Fairness hopes U.S. and European lawmakers follow South Korea's lead and continue their important work to level the playing field for all app developers and users."
The vote comes after lobbying from Apple, Google, and other technology groups. Apple maintained that the provisions of the Telecommunications Business Act would mean the App Store could no longer stay the trusted place for downloading apps.
"User trust in App Store purchases will decrease as a result of this proposal," Apple said in a statement, "leading to fewer opportunities for the over 482,000 registered developers in Korea who have earned more than KRW8.55 trillion to date with Apple."
For its part, Google also stressed that a decision to pass the law would be damaging for both developers and consumers.
However, speaking before the vote, Korea Communications Commission Chairman Han Sang-hyuk said that work could continue on precisely how the law would be implemented.
"Adjustments can be made in executing the policy," he told reporters. "We are fully aware of the concerns of Apple and Google, so we will implement them in consideration of both industry stakeholders and users."
As yet, it is not clear whether the White House will respond to the vote. According to the Information Technology Industries Council in the US, South Korea's bill could be in violation of joint trade agreements.
Read on AppleInsider
Center: flag of South Korea
As expected, the South Korean plenary vote of the country's National Assembly has backed the Telecommunications Business Act. Apple and Google will no longer be able to require developers to sell apps via the App Store, and pay the companies' commission.
According to the Wall Street Journal, the bill has to now be signed into law by President Moon Jae-in. As well as blocking Apple and Google from exclusively using their own in-app payment systems, the new law will also ban them from unreasonably delaying or deleting apps.
These further conditions are intended to prevent the companies retaliating against app makers who choose to use alternative payment systems.
Should Apple or Google fail to comply with the new law, the government will fine them up to 3% of all of the revenues that the company earns in South Korea, including hardware sales.
"South Korea's new app store law is a significant development in the global fight to bring fairness to the digital economy," said Meghan DiMuzio, Executive Director of the Coalition for App Fairness. "We applaud South Korean lawmakers and President Moon Jae-in for setting an example for the rest of the world to hold app store gatekeepers accountable for their harmful and anti-competitive practices. The Coalition for App Fairness hopes U.S. and European lawmakers follow South Korea's lead and continue their important work to level the playing field for all app developers and users."
The vote comes after lobbying from Apple, Google, and other technology groups. Apple maintained that the provisions of the Telecommunications Business Act would mean the App Store could no longer stay the trusted place for downloading apps.
"User trust in App Store purchases will decrease as a result of this proposal," Apple said in a statement, "leading to fewer opportunities for the over 482,000 registered developers in Korea who have earned more than KRW8.55 trillion to date with Apple."
For its part, Google also stressed that a decision to pass the law would be damaging for both developers and consumers.
However, speaking before the vote, Korea Communications Commission Chairman Han Sang-hyuk said that work could continue on precisely how the law would be implemented.
"Adjustments can be made in executing the policy," he told reporters. "We are fully aware of the concerns of Apple and Google, so we will implement them in consideration of both industry stakeholders and users."
As yet, it is not clear whether the White House will respond to the vote. According to the Information Technology Industries Council in the US, South Korea's bill could be in violation of joint trade agreements.
Read on AppleInsider
Comments
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The alt-pay systems might have a small impact initially. Might. My guess is both companies will have an indicator on apps that use their pay systems so customers know when an app uses an alternative. Dollars to doughnuts, the vast majority of people will gravitate towards what they know, Apple and Google.
Forum people are all up in arms over what will amount to a nothing burger imo.
Apple could (and will if everything comes to fruition) put out a disclaimer that they are not liable for damage to device or information compromised by an alternative app store app. Example: Alt-app store app steals cc and banking info or app causes chip to overheat and burn components. ← Apple not responsible. That dog will hunt.
↑↑↑ That's a more apt description of the situation. In this little story, most are still going to use the Apple pitcher because it's what they're used to using. Bobby eventually brings his flavor of lemonade back to the Apple pitcher because not enough people stopped using the Apple pitcher for it to be profitable.
Does anyone honestly believe that Apple South Korea won't fight this using local lawyers and laws?
Perhaps I’m reading it wrong but that text seems to target only in-app purchases. So, Bobby can still offer his lemonade at Apple’s stand using his own pitcher but he can still charge customers for pouring into their cups and Apple gets nothing.
It will be interesting to see how this is all handled by Apple and Google. It appears that, say, Epic can now list Fortnight on the App Store for free, pay nothing (except the $99/year dev fee) and get all their revenue via in-app purchases where they can use their own system and not pay Apple or Google anything. What will Apple and Google do to retain that revenue? It seems unlikely they will just start to shoulder the entire cost of running their respective stores at a loss.
From the article:
As expected, the South Korean plenary vote of the country's National Assembly has backed the Telecommunications Business Act. Apple and Google will no longer be able to require developers to sell apps via the App Store, and pay the companies' commission."
"...Google Play generated $11.2 billion in revenue in 2019 and booked $7 billion in operating income. (Credit to Reuters’ Paresh Dave for working on a Saturday to report this.)That means the Play Store accounted for 20% of what Alphabet reported in operating income that year, a startlingly high number.
Notably, such a proportion is in line with estimates of what Apple’s App Store contributes to the iPhone maker’s gargantuan profits. To be sure, the Apple number is far from confirmed. But the Google estimate comes from a group of states that conducted a nearly two year-long investigation into the company, so it seems likely to be reliable. It is telling that Google, and possibly Apple, get a fifth of their profits from parts of their businesses which the company’s don’t break out separately. The likely reason is that they know the sheer size of the profits are hard to defend."