South Korea is first to say App Store must allow third-party payments

South Korea is first to say App Store must allow third-party payments

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It's a major win for developers and users, and other countries are expected to follow suit.
Image: Killian Bell/Cult of Mac

South Korea has become the first country to tell Apple that it must open up the App Store to third-party payment platforms. The same law also applies to Google, and other countries likely will implement similar rules.

The amendment to South Korea’s Telecommunications Business Act prevents large app market operators from forcing their own payment systems on users and developers. It also bans unreasonable delays in app approvals.

A number of countries have been taking a closer look at Apple’s policies surrounding the App Store, and the tight control it exerts over things like app approvals and payments, in recent years. Many think the company’s unwillingness to accept third-party payment systems — and the large cut it takes from developer revenues — is an antitrust concern and needs to be stopped.

It seems everyone but Apple (and Google) is unhappy with the way things currently stand. Developers want more freedom, and customers want other options that will allow for more competitive pricing. Some have called for more relaxed controls, third-party marketplaces, or for Apple to sell off the App Store. South Korea just became the first country to actually do something about the situation.

South Korea forces Apple to accept third-party payments

“A bill passed Tuesday by South Korea’s National Assembly is the first in the world to dent the tech giants’ dominance over how apps on their platforms sell their digital goods,” reports The Wall Street Journal. “It will become law once signed by President Moon Jae-in, whose party strongly endorsed the legislation.”

The law prevents Apple and Google from forcing their own payment systems on customers and developers, and allows app-makers to offer alternatives when it comes to things like in-app purchases. It also looks to prevent unreasonable delays in app approvals, and stops Apple and Google from deleting apps from their marketplaces as easily as they have in the past.

Developers for some time now have been speaking out against Apple’s policies, in particular. One of the biggest champions for change is Epic Games, which saw all of its titles removed from the App Store after it gave Fortnite players the ability to purchase in-game currency directly from Epic at a discount, rather than using the App Store, last August.

Epic has been fighting Apple in several countries since then, and other developers have voiced their support for the changes Epic wants.

App Store revenue will take a hit

By allowing third-party payment platforms, Apple will not be able to demand a cut of all developer revenues. It currently charges larger developers 30%, while smaller developers cough up just 15%. But when customers choose to pay outside of the App Store, Apple wouldn’t be able to take a cut at all.

While that will surely lead to a significant dent in App Store revenue, it’s great news for Apple customers. Many developers have been forced to charge extra on Mac and iOS to make up for the revenue they’re losing to Apple. In South Korea, they’ll be able to charge less to those who choose to pay for in-app purchases and subscriptions using other payment methods.

Although the changes are exclusive to South Korea for now, it is believed the change will encourage and give grounds to other countries who are looking to stand up to Apple. The United States and the European Union previously began taking steps that could lead to similar legal changes that loosen Apple’s grip on the App Store.

Apple recently announced that it had settled another class-action lawsuit brought by developers. As part of the agreement, it coughed up $100 million for a developer fund, and agreed to minor App Store changes. The company painted the moves as a win for developers, but almost nobody else saw it that way. Most developers feel the changes simply don’t do enough to fix the App Store’s many problems.