South Korea Moves To Curb In-App Purchase Charges

Apple and Google are facing an end to their domination of in-app commission payments, at least in South Korea.

Reuters reported that a South Korean parliamentary committee voted on Wednesday to recommend amending a law that will stop Google and Apple from forcibly charging software developers 30 percent commissions on in-app purchases.

The move is highly significant, as it would be the first such curb by a major economy and market, and could trigger other countries to follow suite.

South Korea Act

The new bill in South Korea, called the ‘Telecommunications Business Act’, is expected to voted upon, on Wednesday.

If approved, the legislation will remove a major revenue stream for both Apple and Googles, by banning them from taking a 30 percent cut from in-app purchases.

The 30 percent commission charge contributed $61bn to Apple’s revenue stream in 2019 for example.

This law will also have a big impact on the developer community, who have long complained about the 30 percent tariff Apple and Google impose.

This is evidenced by the ongoing legal action between Apple and Epic Games, the developer of the game Fornite.

The South Korean bill also means developers will have the freedom to use other payment systems outside of Google and Apple’s ecosystems, once the bill passes into law.

At least in South Korea that is.

At the moment, app developers have to use either Apple’s or Google’s in-app payment systems for digital transactions made on on the Apple App Store, or Google’s Play Store.

Other challenges

It is worth noting that Apple and Google’s worldwide domination of in-app purchases is facing challenges outside of South Korea as well.

In March this year, the UK’s Competition and Markets Authority (CMA) launched an investigation into Apple following complaints that its terms and conditions for app developers are unfair and anti-competitive.

It comes after the European Commission in June 2020 also opened two formal antitrust investigations into Apple, over its App Store and Apple Pay.

On the other side of the pond, US senators earlier this month proposed a bill meant to ease the tight control they believe Apple and Google exert on the app market.

That is at the federal level, but some US states are pursuing their own clampdowns.

Arizona’s state House of Representatives in March passed a bill that prevents both Apple and Google, and any other app store exceeding one million downloads, from demanding developers based in the state exclusively use its app stores.

However that legislation still has a lot of challenges to overcome before it becomes state law, as the Arizona Senate has to discuss and pass the legislation. And then, Arizona Gov. Doug Ducey would have a choice to veto the bill.

And if it does becomes law, Arizona will have to consider how Apple or Google will comply, or if it would be challenged in court.

The North Dakota state senate recently voted against passing a similar bill.

The Arizona law had been lobbied for by the ‘Coalition for App Fairness‘, which had been formed last September by Epic Games, Spotify, Deezer and others.

Meanwhile down in Australia, local regulators have launched an investigation into the mobile app market covered by both the App Store and Play Store.