Following the passage of South Korea’s so-called “anti-Google law,” Google has announced that it will comply with the new mandate by allowing Android app developers on Google Play to offer alternative payment systems in addition to Google’s own.
The legislation marks the first time a government has been able to compel app stores to accept third-party payment systems for in-app purchases — a change that could have an impact on both app stores’ revenues as developers seek to avoid the tech giants’ commissions.
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Google says in a blog post that developers in South Korea will be able to add an alternative in-app billing system to Google Play for their mobile and tablet users in the country. Users will be able to select which billing system they want to use for their purchase during the checkout process.
Alternative billing systems, the company warns, will “not offer the same protections” or features as Google’s own, such as parental controls, family payment methods, built-in subscription management, support for Google Play gift cards, and support for Google Play’s rewards program, Play Points. It was also stated that 1.5 million South Korean users used Play Store gift cards this year, with over 12 million enrolling in Play Points.
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Google then reiterated why it believes it has the right to charge a commission on in-app purchases, claiming that the revenue helps fund and develop Android, the Play Store, developer tools, and other products.
Google said that details on how to implement third-party billing systems will be provided to developers in the coming weeks.
Source: Google
The South Korean law’s passage comes at a time when governments around the world are investigating Apple and Google for antitrust violations and considering new regulations governing their respective digital payment systems. In the United States, Epic Games is suing both companies for the right to offer its own in-app billing system, claiming that Apple and Google are monopolies. Epic’s case against Apple is now being appealed, as the original ruling determined that Apple was not a monopolist, but that Apple needed to change its App Store policies to allow links to other payment systems.
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In South Korea, however, the matter was handled by the National Assembly rather than business lawsuits. On Wednesday, August 25, 2021, the governing body voted to proceed with the revised Telecommunication Business Act, which opens up app stores.
Apple, like Google, argued that such a law would make it more difficult to protect consumers from fraud and their privacy. Apple updated its App Store Guidelines in the days following South Korea’s decision, but only to comply with the decision of a class action settlement with a group of US app developers who wanted the ability to contact their customers outside the App Store to inform them about other payment options.
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Apple will attend a hearing related to the Epic Games lawsuit in a few days to see if it can postpone allowing links to alternative payment mechanisms until the outcome of its appeal is known.
Meanwhile, Apple has not yet made changes to comply with South Korean law, but has stated that its current policies are.
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In recent months, both tech behemoths have worked to avoid looming regulations by lowering their app store commissions. Google recently reduced its commissions on subscription apps to 15% and as low as 10% for media apps. Apple has yet to take such a step.
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Apple and Google, on the other hand, had previously made changes to lower commissions for smaller businesses, and Apple this summer carved out a new lower commission structure for news publishers who participate in Apple News.
