Apple’s App Store commission to unravel in Korea; analyst says US could follow

Update: Bloomberg tech reporter Sohee Kim tweeted that the vote has been postponed due to extra time needed for a separate bill designed to tackle ‘fake news.’

Apple’s App Store commission is under threat from a new antitrust law in Korea that is “almost certain” to get the necessary votes today.

It would allow developers to choose their own payment platforms, and avoid the 15% or 30% cut they currently have to pay to Apple for app sales and in-app purchases.

Background

Apple’s monopoly on the sale of iOS apps and in-app purchases is the biggest antitrust concern about the tech giant. While Apple claims that the relevant market definition is “smartphone apps,” in which it does not have a monopoly, many regulators and legislators around the world view the market definition as “iOS apps,” in which it does.

This is because it is not realistic for most developers to launch an Android app but not an iOS one. An iOS app is essential to reach a large slice of the population.

Many developers would like the option to bypass Apple as a payment platform, and an increasing number of governments seem sympathetic to this.

Apple’s view remains that it created the market for iOS apps, and is entitled to be rewarded for this, and for the opportunity it offers to developers. The company did make a massive U-turn when it cut its commission from 30% to 15% for the vast majority of developers, but has so far stuck to its guns when it comes to its anti-steering policy, offering only a tiny concession to settle a recent lawsuit.

App Store commission under threat in South Korea

We last week reported that South Korea was working on a law to force both Apple and Google to allow developers to offer third-party payment platforms within their apps. A vote might have happened the very next day, but was delayed, likely to ensure it had sufficient support to pass.

Bloomberg reports that the vote takes place today, and support now looks solid.

South Korea is expected to become the first country to pass a law ending Apple and Google’s domination of payments on their mobile platforms, setting a potentially radical precedent for their lucrative app store operations everywhere from India to the US […]

The Telecommunications Business Act would mandate giving users a free choice of app payment providers. The bill, which is almost certain to pass an assembly vote Monday given the ruling party’s super-majority, opens the door for companies like Fortnite maker Epic Games Inc. to transact directly with users and bypass the platform owner’s charges.

Other governments will be watching closely, and one analyst says that the prevailing mood around the world suggests that other countries may well follow Korea’s lead.

“This could presage similar actions elsewhere,” said Omdia analyst Guillermo Escofet, who specializes in digital consumer platforms. “Regulators, lawmakers and litigators in North America and Europe are also scrutinizing app-store billing rules, and the overriding political mood has become hostile to the enormous amount of power concentrated in the hands of the tech giants.”

Photo: Josip Ivankovic/Unsplash