Apple and Google are saved by the South Korean axe to end their in-app purchase commissions

A regulatory bill to curb the dominance of Apple and Google on in-app purchases’ commission is put on hold, for an indefinite time. Yonhap reports that the plenary session for final voting on the bill was “delayed until further notice.”

Earlier it was reported that the parliament’s legislation and judiciary committee in South Korea has approved the “Anti-Google law” Act which would bar Apple and Google from charging a commission from developers for all in-app purchases via their app stores. After the final vote, the new law would have allowed developers to offer third-party app stores on iOS and Android devices with a payment structure determined by the developers.

The controversial Apple’s and Google’s in-app purchases commission structure

South Korea was anticipated to be the first country to introduce legislation “curbs on global tech giants’ in-app billing policies, which have been increasingly under scrutiny around the world.” But that seems like an unlikely possibility.

Both tech giants charge 15% to 30% share cut from developers for all in-app purchases. Apple explains that the commission is used to fund the services it provides to developers for apps’ development and marketing. And also for making their apps available to billions of users around the world in a safe and secure digital marketplace. During the COVID-19 pandemic, both companies revised their commission structure to distinguish between big and small developers. The revision was also the result of the pressure created by Epic Games lawsuits against Apple and Google’s in-app purchases share cut.

But disgruntled developers like Epic Games and regulators ignore that reduced commission rate and argue that the 30% is an unfair share cut which the South Korean regulators wanted to eliminated, entirely.  According to Reuters:

In South Korea, the home market of Android phone maker Samsung Electronics Co Ltd (005930.KS), Google Play Store earned revenue of nearly 6 trillion won ($5.15 billion) in 2019, according to a government report published last year.

For Apple too, commissions from in-app purchases are a key part of its $53.8 billion services business, and are a major expense for some app developers.

In response to the Korean bill, Apple said that the monetary benefits are mutual for the company and developers.

The iPhone maker said it believes “user trust in App Store purchases will decrease as a result of this proposal — 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.”