South Korea Delays Bill That Would Ban Apple From Requiring Developers to Use In-App Purchase System

South Korea has delayed voting on a bill that would ban Apple and Google from requiring developers to use their in-app purchasing systems, a move that would open the door to allowing third-party payment methods, representing a possible significant threat to Apple and Google's app marketplace business models.

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The bill, coming in the form of an amendment to the existing Telecommunications Business Act, was widely reported to have been voted on today. However, the National Assembly's schedule and agenda lacked mention of the amendment, instead focusing on other bills on the press, economy, and more. A date for the assembly to vote on the bill has not yet been set.

The bill, if it passes, will aim to stop Apple and Google from unfairly exploiting their position to "force a provider of mobile content, etc., to use a specific payment method," according to a readout of the bill.

It would also be the first time any government takes substantive legislative steps to regulate and control Apple and Google's app distribution platforms. Both platforms have been under increased scrutiny in recent years, with lawmakers, developers, and others calling out the need for regulation and a crackdown on behavior possibly deemed as "anti-competitive."

Apple's in-app purchasing system has been at the center of scrutiny ever since game developer Epic Games, in August of last year, avoided Apple's App Store policy by implementing a direct payment method in its hit game Fortnite. Apple's current ‌App Store‌ policy bans developers from allowing users to use payment methods other than the platform's, which gives Apple a 15% to 30% commission on all digital purchases made.

Apple has defended its system in the wake of the controversy, saying that it protects users from fraud and potential scams and offers developers an easy way to charge users for services and products without a need for significant overhead.

The bill has gained increasing support in the past few weeks, including from the Coalition for App Fairness. The coalition consists of ‌Epic Games‌, Spotify, developers, and vocal anti-Apple critics taking issue with how Apple operates its ‌App Store‌ and the nature of its products. Earlier this month, the head of the coalition met with lead South Korean officials to lend their support for the bill.

It remains unclear how Apple and Google will respond or adjust their app marketplaces in South Korea once the bill does pass. Apple utilizes a single ‌App Store‌ policy for all the countries in which the ‌App Store‌ operates. Unless the company offers developers in South Korea a different set of rules, which could be a slippery slope for international developers, the company may be forced to alter its ways globally.

In brief remarks to reporters on Thursday, Han Sang-hyuk, the chairman of South Korea's Communications Commission, said his committee and colleagues are "fully aware of the concerns of Apple and Google" and that South Korea will work with both companies to implement the bill.

Apple charges all developers a $99 annual fee to be registered developers on its platforms. The company's commission charge for in-app purchases is one of just a few ways it collects revenue from the ‌App Store‌. For the third quarter of this year, Apple recorded an all-time revenue record for its services business, including the ‌App Store‌ of $17.5 billion.

Last week, Apple settled with developers to changes to the ‌App Store‌, including a change in ‌App Store‌ policy that will allow developers to email users about payment methods available outside of the platform. The updated policy allows users to opt into communication from developers informing them of payment methods outside the platform, bypassing the need for developers to give Apple a 30% commission.

Critics of the ‌App Store‌ have called the new policy a minimal change in the overall scheme of the ‌App Store‌. Spotify's chief legal officer, Horacio Gutierrez, said that Apple's new policy fails to "address the most basic aspects of their anticompetitive and unfair ‌App Store‌ practices." Gutierrez goes on to say that Apple is "attempting to distract policymakers and regulators and slow down the momentum that’s building around the world to address their behavior."

Top Rated Comments

draig Avatar
10 months ago
What is ridiculous is how often these sorts of fights get presented as about users, protecting users, offering users more choices when really it is only about money.
Score: 9 Votes (Like | Disagree)
draig Avatar
10 months ago

It’s Korean so Samsung protection maybe? I don’t know why all these companies expect apple to open up the thing that got them rich?
Cause they want a slice of the pie
Score: 4 Votes (Like | Disagree)
840quadra Avatar
10 months ago
All of these regulations (worldwide and different nations) are going to amount to death by 1000 cuts. I wonder at what point companies like Apple / Google / etc just pull out of some markets, or go back to not offering some services in various nations due to all the regulations.

Price of being a big company (not just tech) here and now I guess.
Score: 3 Votes (Like | Disagree)
FightTheFuture Avatar
10 months ago

Cause they want a slice of the pie
They’re already getting a slice of the pie. Samsung sources components for Apple beyond just iPhones.
Score: 3 Votes (Like | Disagree)
Krizoitz Avatar
10 months ago

I know Apple created an amazing eco system for IOS, they did it, nobody else ... BUT ... I still wish there was an alternative to the Apple store to allow users a choice of picking applications certified by Apple in their store or an alternative. Microsoft does not demand that third-party software I run on my Windows system is purchased from their store, the same is true for Apple's MacOS.
It’s fine to want this, I totally respect that. But Apple shouldn’t be forced to do it. Microsoft also doesn’t allow for 3rd party stores on Xbox, different products with different options, same as iPhone and Mac.
Score: 2 Votes (Like | Disagree)
Krizoitz Avatar
10 months ago

What is ridiculous is how often these sorts of fights get presented as about users, protecting users, offering users more choices when really it is only about money.
Yup, as an end user I’m thrilled that i don’t have to deal with dozens of different payment services to use my iPhone. Having Apple, a company I trust way more than Epic or any of the other “Coalition” members, be who handles my payment details is far superior. So yeah, to me this is a better system. The people who benefit from the alternative are not users, but other companies like Epic (who, meanwhile, do they exact same thing in their own store). Epic et. al can offer 3rd party stores on Android. They can develop their own smartphone OS. They can refuse to develop for iOS and try to get users to put pressure on Apple to change their mind. But forcing it by bills like this is BS. And this is the same Epic who was featured prominently by Apple for YEARS in the AppStore and at keynotes. Then Fortnite took off and people got addicted to micro transactions. Shame.

Honestly I’d love to see Apple either just completely disallow in app purchases in Korea or pull out of Korea if this bill ever passes. It’s hardly a key market given the dominance of Samsung in its home country.
Score: 2 Votes (Like | Disagree)

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