Google To Allow Third Party App Payments In South Korea

Google has responded to the new legal reality in South Korea, after it confirmed plans to allow third-party payment systems.

Reuters reported the move, stating that Google’s undertaking in South Korea is in order for it to comply with a new law in the country.

It is the first time that a US tech giant has amended its payment policy for a specific country, and it opens up the question will Apple follow Google’s lead?

South Korean law

In August South Korea became the first major economy in the world to effectively stop Apple and Google from charging commissions on in-app purchases.

This was because South Korea’s parliament approved the amended ‘Telecommunications Business Act’ (also known as the anti-Google law).

This stops Google and Apple from forcibly charging software developers up to a 30 percent commissions on in-app purchases

The legislation went into effect on 15 September, and the Korea Communications Commission’s (KCC) requested that Google and Apple come up with compliance plans for the new law.

This law is expected (if other countries copy South Korea’s move) to have a big impact on the developer community, who have long complained about the up to 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.

Google compliance

“We respect the decision of the National Assembly, and we are sharing some changes to respond to this new law, including giving developers that sell in-app digital goods and services the option to add an alternative in-app billing system alongside Google Play’s billing system for their users in South Korea,” Google was quoted by Reuters as saying in a statement.

Google, it should be noted, charges developers a 15 percent service fee for distributing apps, said it would reduce this to 11 percent when users choose an alternative billing system.

Google reportedly added that alternative billing systems may not offer the same protection or payment options and features of Google Play’s billing system.

The KCC said Google’s plans would be implemented this year and would only apply to South Korea.

“We were able to confirm Google’s determination to comply with the law, and I hope (Google) will implement this policy change in a way to reflect the legislative purpose of the revised law,” KCC Chairman Han Sang-hyuk was quoted as saying.

But Apple remains another matter.

In October, Apple reportedly told the South Korean government that it was already in compliance with the new law and did not need to change its app store policy.

But a South Korean government official has warned the iPhone maker of a possible investigation into its compliance with new App Store payment law.

Global challenges

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

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, a bipartisan trio of US senators 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.