South Korea Passes Bill Banning Apple From Requiring Developers to Use App Store In-App Purchase System

[bradman83]

This will be an interesting case study in what happens when this restriction is lifted. Will Apple Pay die as a purchase option or will it live on?

I suspect Apple Pay will survive for most apps - particularly small ones - since user convenience factor may drive sales more than they lose from high Apple Pay fees (and the fee is lower anyway for small devs).

I think larger devs will absolutely switch away in S Korea to save that % profit margin. I bet PayPal SK will be doing great business!

The mega big apps like Netflix, Amazon, etc. might even switch on the option to pay/subscribe from within the app.

I really think Apple made a mistake by not unilaterally cutting the % years ago to a much lower level that would avoid scrutiny - this is coming about because Apple (and Google) has clung to 30% as the right number for too long and now faces politicians and judges setting that % or abolishing it entirely.

I think you’re mixing up Apple Pay with in-app payments. Apple Pay is a fairly open payment standard where the billing is done by the merchant via their own payment processor through the Apple Pay interface. There are plenty of websites outside the App Store that accept Apple Pay, plus retail locations. In-app payments involve Apple processing the payment themselves for the developer and paying out the developer’s share of the cut.

Apple Pay would actually be an ideal solution if In App Payments were made optional. Consumers wouldn’t have to juggle multiple payment mechanisms and it’s more secure than storing your credit card information in multiple places.

 

[justanotherdave]

Just let South Korea burn.

There will be countless scammers taking advantage of this. Like games with instant buy buttons so kids can rack up large charges. Or vaguely worded purchases designed to deceive customers. And good luck getting a refund as I doubt any of these companies will invest in an actual customer service department so you can request refunds. It will be such a bad experience for consumers and set an example for other countries what happens when you remove restrictions and let developers have a free-for-all.

And this is only regarding payments. Can you imagine the mess if third party stores are allowed?

 

[jlc1978]

They (Apple) should charge for what exactly? For the sake of the dividends that go to the shareholders perhaps?

That is the sole reason a for profit company exists - to make money for its owners.

If Apple can't make money from a service they aren't offering, maybe Apple should actually use the pile of money it is sitting on to innovate, research and develop meaningful and useful products rather than design creative ways to create an steady source of revenue by locking the ones that actually give real value to their platform: the developers of apps.
It is called competition.

It's much more of a symbiotic relationship - Apple needs the developers but they need access to Apple's large customer base. Without that, developers have a lot harder time making money.

South Korea just made (us) a big favour by showing what is possible and why regardless of the monopolistic practices of some technological empires.

I bet Epic Games was somehow involved in this.

I wonder what EPIC will say if all of a sudden someone demands they open up any third party Fortnight stuff to 3rd party payment processors while still offering them in app?

What developers want to have is competition and freedom. No more App rejections just because you mention something about payment in you App.

What developers want is continued access to the app store's user base for a lot less money. They're as greedy as Apple.

Apple would forward payment disputes to the developer to handle and tell people to dispute their CC charge, and if they get too many simply drop the app.

Of course that's the idea. Charge a hosting fee. How do you think it's done in retail stores? You think Sony, Samsung, LG, etc don't pay stores like Best Buy to sell their electronics?

They may get slotting fees but I can assure you they also markup each product they sell, often more than Apple's 30% depending on the product.

I am on the side that will in the end win. Vendor lock in is bad for the consumer. It provides too few choices. I love Apple OSes. What I don't love is the lack of freedom on the iOS platform. I want to have my phone my way. I cannot change the springboard in iOS. But I can change the launcher in Android. I cannot choose my own appstore in iOS. I can in Android. I can actually THEME Android. In iOS I am stuck with only changing a few colors here and there.

Then don't buy an Apple product.

Operating the app store doesn't cost Apple the billions it gets them with their 30% extortion rate (above 1 million $ I know).

Maybe Apple should return to the old retail model where Apple acts like a real store, requires them to host the app, charges for every service, lets them pay to market it, and only hosts a fraction of the apps that actually sells and drops any that don't meet their revenue target. No more free apps, if you want to be a free app then find your own way to do that outside of Apple.

30% is a lot better than the old way, and requires a lot less cash up front to bring an app to market.

 

[orthorim]

It has nothing to do with users. None of these types of laws are going to benefit users.

At least some people are awake here haha.

Kids, today you learn, governments - a term that literally means "mind control" - never do anything that benefits the people.

You can be sure that they sell whatever they're doing as benefiting the people. And just as sure that that is not the case.

I think Apple needs to decentralize its app store and review process so that it can get away from governments; instead, unfortunately, Apple is complying with governments.

 

[Rogifan]

Does this law say Apple can’t require developers to offer their IAP along side other options? I think most of us advocating for Apple to allow other options are saying these options would be along side Apple’s IAP so everyone who wants to use Apple’s payment system still could.

 

[Rogifan]

Which is not my point.

People are saying that Apple could compete with other payment processing companies by simply offering iTunes billing at a more competitive rate, say 5% or 3% or whatever the current prevailing rate is.

I don’t see how that makes sense, when these companies only have to contend with the costs of processing payments, while Apple has to deal with both that and the cost of operating the App Store.

I can see a couple of things which Apple could do.

1) Simply open up and absorb the costs in South Korea only (not going to happen, because it will just embolden other countries to do the same thing).

2) Charge developers more in annual fees (possibly $200 or $300 a year), but you end penalising the smaller developers more and risk driving them away from the app store.

3) Find some way to audit how much developers earn and bill them separately for 15-30%. No idea how Apple might figure this out if users paid via third party payment options, but let’s assume for argument’s sake that Apple has a way.

4) Pull out of South Korea (unlikely).

Your move, Apple. Your move.

How about Apple separate the cost of processing payments and running the App Store? Think about all the ’free’ apps that contribute nothing. You basically have games subsidizing the most popular apps in the store that happen to be ’free’.

 

[SFjohn]

As for South Korea, Apple can just shutter it’s online app stores completely. Revert back to the days of the original iPhone where apps can only run on a web browser. SK won’t get their 3% tax. I think an example needs to be made.

 

[Rogifan]

Apple’s commission covers a lot more than mere payment processing.

The commission is also staying. People associate the in-app payment system with the commission, but the system is just the current mechanism. Apple can easily require developers give 30% of their revenue from apps that are published in the store or use their SDK and development tools.

Epic charges a revenue commission to any game that use their Unreal Engine. Nothing stopping Apple from doing the same for developers that use the iOS SDK and developer tools.

Which is why payments and the costs of running the App Store/dev tools & support should be separated. Of course this isn’t just about the SDK and dev tools either. This is Apple believing they own the customer and are bringing the customer to the developers and thus deserve a cut of any success the developer has.

 

[Muzzakus]

Excellent….stroking cat on lap

 

[draig]

Even if that happened, people are so lazy I would bet that > 90% of users would still get everything from the Apple app store, just because it's easiest and most convenient.

That isn't laziness... it's intelligence. The current App Store does everything I need and does it in a way that requires very little time and energy from me.

 

[Cosmosent]

Would this be of ANY interest to most if this New Law propagates around the world & becomes standard ?

A "middle-ground" Payment Processing idea:

One that circumvents the need for customers to enter ANY credit card info on App Dev third-party websites.

Specifically, one in which Apple enables App Dev third-party websites to support & accept App Store credit.

If, for example, this proposed option had a processing fee of 7.5%, I think it could be a BIG win-win.

I passed this idea to Tim Cook last night.

The End Result, the IAP Pricing on App Dev third-party websites should be noticeably less than on Apple's "curated" iOS App Store.

And it alleviates a BIG concern, perhaps the BIGGEST, for many !

I will also pass the idea to David Cicilline in Congress later today, & ask Congress to make it Law here in the States & set the fee @ 7.5%.

 

[I7guy]

999$ developer annual fees for South Korean developers.

I don't doubt a second for Apple and Google to find evil workarounds to this new law... unless the law anticipated it in great detail.

The law is very evil, imo.

 

[contacos]

This doesn’t even make much sense. Apple is just another merchant, just like ingenico and they all have to follow the same basic financial rules like 3D Secure in the EU. Kind of tacky to say only „we“ are secure enough

 

[WaffleBoi_15]

Then only purchase apps that use Apple's infrastructure. If you never had a problem being forced to Apple's pay system, you still don't have a problem because you wouldn't be forced to use an alternative pay system or App Store. Just keep doing what you're already doing. Problem solved.

Except we all know certain greedy developers are gonna force you to use their own payment method so realistically this might not be possible.

 

[matrix42]

Wonder if it works the other way around, For example Netflix is an external only subscription, so now will they have to offer Apple's payment option as well and let the user choose, theirs or Apple's and of course pass on a savings if using their payment system.

 

[Timster83]

The world is full of companies that cornered the market and don’t give a damn about their users. I can see Microsoft, Adobe, Blizzard, most large media companies (so affecting Disney+, HBO Max, NYTimes) forcing switch to their own payment systems with separate card management, separate cancellation rules (“call us at least 30 days before the end of subscription period”), etc.

This is all very true, and iOS users will end up with worse experiences than today (with some exceptions).

Apple either didn't see the writing on the wall, thought their gravy train would never end, or didn't care about the repercussions to users. Whatever, their failure to act on their own reflects very badly on them indeed.

 

[WaffleBoi_15]

Sucks to be you. Things are changing. Learn to live with it or buy a Windows phone where you can have only one store and one payment method (no security updates, tho, because Windows phones are no longer produced. So choose wisely.)

This is the kind of response where absolutely no one asked for your wrong opinion.

 

[WiseAJ]

It's about to be real expensive to be an App Developer in North South Korea.

 

[Shirasaki]

Apple and Google must allow developers to use other payment systems, new Korean law declares

A major milestone in global anti-trust legislation

www.theverge.com

"up to 3 percent" is pocket change for Apple.

And the beauty of this sanction is, it will not be paid by Apple, but by all developers developing and/or selling their apps and/or services in South Korea. How? Raise the prices and boom, apple doesn’t even lose a dime. Developer will be the ultimate loser.

 

[I7guy]

How about Apple separate the cost of processing payments and running the App Store? Think about all the ’free’ apps that contribute nothing. You basically have games subsidizing the most popular apps in the store that happen to be ’free’.

Can you prove that beyond a shadow of a doubt? Of course not. It may seem logical, but unless the internal accounting of Apple is known, most do not know who pays and/or subsidizes what?

 

[jlc1978]

Which is why payments and the costs of running the App Store/dev tools & support should be separated. Of course this isn’t just about the SDK and dev tools either.

That would hurt small developers a their upfront costs would go up.

This is Apple believing they own the customer and are bringing the customer to the developers and thus deserve a cut of any success the developer has.

They do, just as any retail store does. They get a cut in exchange for access to their customer base, one that for Apple developers has proven lucrative. If developers had to replicate the app store instead of use it they'd likely find in most cases the fixed costs alone would exceed 30% of sales.

 

[_Spinn_]

I can't wait to see all the unintended side effects this causes. This was never about the consumer. This was about devs wanting a free ride on Apple's infrastructure. As a consumer I already have options for what payment method actually backs Apple's IAP - whether that be a credit card (Visa, MasterCard, Discover, etc.), PayPal via linked AppleID account, or cash via purchased gift cards. I highly doubt prices will be lower with 3rd party IAP - Apple already lowered their commission from 30% to 15% for most apps and I'm not aware of any that have lowered their prices to pass the savings onto the consumer.

 

[CthuluLemon]

I see nothing about when this soon-to-be law goes into effect in this or the WSJ article. If the timing is too aggressive then Apple may simply shut down all app purchases and subscriptions in South Korea.

Heck, Apple may do it anyways to play a game of chicken with the government and send a message to other countries. I don’t think they should, but they might.

Apple doesn’t really need app revenue. They could take just 3% or whatever to pay the credit card fees and pay the server cost out of pocket. It would still be worth it because it’s a major driver of iPhone sales, which are their bread and butter.

If I were Tim Cook, I would drop the cut to something much lower, maybe 10%, ASAP and encourage Google to do likewise. That would take the force out of most of the anti-trust stuff globally. And it would still allow Apple to have their control. Given the results here in South Korea, shareholders would be less upset because the threat of lost App Store revenue is now very real.

It’s better to keep your walled garden and charge lower admission then let the government tear down the walls!

playing chicken with a government is only going to further justify calls to reign in Apple. The Zuck tried it with Australia last year and it didn’t work out well for him. And do we really want Apple following Facebook’s lead on anything?

 

[0924487]

Hello Pandora, Bonjour Medusa.

 

[dk001]

Anyone else think Apple's response is dystopian and downright creepy?

More likely trying to protect a revenue stream that has no current competition.