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

[gregmancuso]

This is good for consumers. More choice is good for consumers.

This has nothing to do with consumers. It is all about a vocal minority of developers (granted some very large developers). It will ultimately harm consumers. They will be forced to use third-party payment or forego an app. That is probably OK in most cases as there are alternatives. But there are those "must have" apps and if they require third-party payment, then you, the consumer, have no choice and no benefit.

This also then leads to the ultimate developer desire - alternate stores and side loading without rules and oversight. Again no benefit to consumers. In fact, has the same issue with third-party payment carry to stores but now you may also have to actually load or authorize another store in order to even see the apps.

Apple's statement the other day lifting the ban of alternate payment advirtising basically accomplishes this without the need for opening up the payment modeln

edit: typo.

 

[gregmancuso]

It's coming from people like me. I am an Apple user. I own an iPad. It's the best tablet out there. Do you know why I don't own an iPhone? It's because I cannot do anything close to what I can do on an Android phone. If there were decent Android tablets I'd probably buy one.

Serious question - what can you do on an Android phone? Or what about Android would drive you to abandon your iPad if some mythical high-quality Android tablet is released?

 

[I7guy]

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

No, Apples’ response seems reasonable.

 

[Rogifan]

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?

Of course I don’t know for sure how Apple does it’s accounting but it’s highly likely the apps with the most IAP revenue are games.

 

[Rogifan]

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



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.

Once I download an app to my phone is it still part of Apple’s store? And if this is about access to customer base why does it only apply to digital goods? Is Apple not providing Uber and Lyft it’s customer base?

 

[iliria]

No sympathy at all for Apple despite being a user of their products. I know very well the premium prices that Apple charges for its products and the huge profit margins that it gets.

I applaud what South Korea has done and I hope other countries do the same (for Apple, Google, Samsung and anyone else who tries ot monopolise the market).

I sincerely hope that laws are passed that stop Apple from controlling what 3rd party retailers charge for its products (iPhone, Mac, etc). That is when we would benefit as consumers.

 

[fmillion]

It's coming from people like me. I am an Apple user. I own an iPad. It's the best tablet out there. Do you know why I don't own an iPhone? It's because I cannot do anything close to what I can do on an Android phone. If there were decent Android tablets I'd probably buy one.

It's coming from people like me too. I used to be 100% Apple. iPad, Mac, iPhone, iPod, Apple TV, AirPort Extreme, Apple Watch, etc.

But their continued erosion of user choice, their condescending attitude ("we have to do this because you don't know how to keep yourself safe") and the slowly improving offerings of competitors finally made me switch. Their bait-and-switch and misrepresentation (e.g. the privacy vs photo scanning issue) makes it even worse.

"You don't like Apple? Go get an Android." Which is exactly what I did. Telling people who dislike Apple's products to go use a competitor's products is elitist and actually contrary to Apple's best interests, but hey, if that's what Apple and its customers want, then I'm happy to oblige. I'm all for capitalism, but once a company gets large enough that it can literally afford to ignore huge sections of its customer base and all but laugh in the face of those who walk away, that is where a little intervention is needed. Capitalism works because money talks, but some companies have gotten so large and ingrained themselves into society so tightly that people either have little choice but to be their customer, directly or indirectly (Facebook anyone?) or they're so large and powerful that they literally can ignore their customers' wishes and complaints.

But that doesn't mean I don't still "like" Apple. I still believe they make some awesome products, but I also feel they're hobbling not only themselves but the entire industry with their tactics. Like it or not, companies look up to Apple, and this often means that whatever Apple does, others follow. This actually slowly does erode user choice - even Android has suffered from some degree of platform lock-in and shenanigans like restricting the app data folders in Android 11 (all in the name of security, of course - again, assuming that I'm not able to take responsibility for myself). So when people like me say they want Apple to change their ways, what I'm really saying is that the industry should change its ways, and Apple is the "McDonalds" of the tech industry - they're one of the most visible companies, and their actions can and do shape the industry at large.

 

[gregmancuso]

Apple charge literally 10x what other payment processors do, so I don't think any of the incentives you listed are going to help.

They're going to have to compete on price and drastically drop their fees. At 5% everyone but the very largest of companies would stick with Apple's system for simplicities sake. Any higher than that and I think even small developers will start to look into alternative payment systems.

First, every one of the incentives mentioned in the post you replied to are CONSUMER benefits. Your comment about dropping to 5% and "all but the largest..." comment refer to DEVELOPER issues.

Key benefits on the list already exist (e.g., better purchase history management, ease of subscription management, simplified subscription cancellation). Others, like price guarantees are akin to most favored nations clauses. While not technically illegal, MFN clauses increase scrutiny and can easily bleed into antitrust (look back at the Apple Books lawsuit).

By the way, the fee apple charges is not a credit card processing fee. It also includes:

• Global tax payments on behalf of developers along with all required reporting
• First line support for application issues, including install and billing
• Support for the App Store (operations, personnel, real estate, hardware, utilities, real estate taxes, etc.)
• App Store review process and staff
• Free access to notifications servers
• Free access to use of Apple Maps in applications
• Free access to one petabyte of online storage for your apps' users' data
• Free access to Testflight and developer app beta support
• Funding for all developer tools which are free to use by all (Xcode, API, docs, etc.)
• Funding for new features in iOS and API (e.g., Metal, AI/ML, HEIC/ProRaw, Portrait, etc.)

The $99 annual fee covers:

• Deployment certificates necessary to submit apps to the App Store
• Access to developer-beta-builds of all Apple products
• Access to developer support (2 free per year)
• Access to developer forums

We can argue all day long as to whether 30% is too high. Or even 15%. But we can all agree it is not 5%. A case could be made to have an itemized fee schedule. 6% for credit card transaction processing, plus tax accounting, and a little towards developer tools funding. An additional 9% to 24% includes all the rest. And everyone still needs to pay the annual fee anyway as they will need deployment certificates just like on Mac.

edit: added Testflight and corrected a typo.

 

[lederermc]

Uh oh, what now Tim?
Technically Apple can just allow this without changing anything. I mean Netflix and Spotify already take money externally, not using IAPs. The trick is, will Apple allow developers to advertise it within their apps.

Netflix (and I assume Spotify) external pay systems are not within the app. I believe the law requires Apple to allow the 3rd party payments from within the app essentially using the App Store for free. Developers that implement 3rd party pay systems should be charged for each download of their app.

 

[lederermc]

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

The competition is Android.

 

[rjohnstone]

Netflix (and I assume Spotify) external pay systems are not within the app. I believe the law requires Apple to allow the 3rd party payments from within the app essentially using the App Store for free. Developers that implement 3rd party pay systems should be charged for each download of their app.

Developers already pay for access to the App Store via their annual Developer membership fee.
So no, they're not using it for free.

 

[dguisinger]

What people miss is Apple will now be forced to compete with 3rd party payments for subscriptions.

3rd party providers are at 3%, not 30/15% like Apple. (Honestly, most people don't likely keep their subscriptions on things for over a year, so 15% is a "mythological creature")

Its well known that people will trust Apple or Google more to be a single point of payment. I guarantee you if Apple now has to compete against 3%, if they offered their in-app processing rate at 10%, most developers would stick with them. But 30%? Many developers will chose the 3% route or to offer subscriptions at two prices, one through Apple and one direct.

The relationship between customer and app developer should be direct once the app is purchased/downloaded. Apple has nothing to do with my interactions with the App at that point, so buzz off. If they made bad business decisions by allowing free apps, then charge for the bandwidth/storage. Most app developers wouldn't mind, they either are so important that they wouldn't owe much of anything - or are successful and then it won't be a problem anyways. But, seeing how massively profitable Apple is, its hard to say hosting free apps is bleeding them dry.

 

[jefhai]

Apple should just ban Korea from the AppStore

 

[nefster]

This is good for consumers. More choice is good for consumers.

Steve Jobs disagreed with this premise which is what led to the success of the design decisions Apple has made over the years. And as a consumer I have never said to myself, "Boy, I wish I had a different payment system I could go through to pay for this app!" This move is not consumer-driven, it is driven by developers and purveyors of other payment systems who want to make money. Maybe they have a right to do so, maybe not? But none of this helps me in any way.

 

[Mitochris]

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?

Totally, but my post was more a comment that this would be a bad thing for smaller developers, because Apple would increase the costs. The $99./year won’t be enough. And Best Buy won’t sell individual items from a single company/person either. So moving to such a system would be bad. Not even mentioning that the consumer won’t be able to collectively see all their subscriptions.

 

[jefhai]

This is good for consumers. More choice is good for consumers.

No more unregulated choice leads to things like anti vaxxers and the Covid crisis

 

[I7guy]

What people miss is Apple will now be forced to compete with 3rd party payments for subscriptions.

[...]

Why should Apple be forced? The ios app store is their invention, their innovation. Are there any government regulations being rushed out the door to force Walmart to accept Apple Pay?

 

[DoubleJ2119]

Deleted.

 

[mrchinchilla]

Great. So now apps in the Korean App Store will just feature the main Korean monopoly payment systems (KakaoPay and Naver Pay — really “fair” and “open market”) or the myriad of other obscure payment methods that are an absolute b**** to set up and use with all of the hoops you have to jump through for ID verification every single time.

 

[MrDerby01]

🥳YES!!!! This is a huge win for everyone. Finally! So it begins.. The monopoly wall being torn down as was the berlin wall.

People are finally seeing through all of the smoke and mirrors of apple.

What's funny is that a large percentage of sales in South Korea are really the Samsung products 🤣🤣🤣

 

[chandler55]

But there are those "must have" apps and if they require third-party payment, then you, the consumer, have no choice and no benefit.

if devs had their way they would just put apple's payment solution at a 30% premium, theres your choice for everyone. this is on apple not providing choice

 

[MrDerby01]

Great. So now apps in the Korean App Store will just feature the main Korean monopoly payment systems (KakaoPay and Naver Pay — really “fair” and “open market”) or the myriad of other obscure payment methods that are an absolute b**** to set up and use with all of the hoops you have to jump through for ID verification every single time.

Those payment methods are light years ahead. At least for the US. Not sure what country your from.

 

[lederermc]

MacRumors failed to mention the penalty is only 3% for failure to comply. Apple could just tack on an additional 3% to the App store commission.

 

[CthuluLemon]

If Apple were realistic and proactive, they would have avoided this. They stayed greedy, and now the dominoes are falling. With the hardware market growing ever increasingly saturated, it will all be up to if Apple’s services are truly as superior as they claim, or if it was all just inflated with anti-competitive tactics. They squandered the opportunity to see if that was true before regulatory intervention, to see if their products can actually compete in the market on their own merits and without leg ups from their other business. If Apple’s service products are as worth it as they say they are, the demand despite the high fees will still be there. My guess is they know without the restrictions the demand never has been nor will it ever be that high. They used their market position in phone hardware sales to strong arm software developers. They continued to do so even as they ballooned in size and faced increasing scrutiny, and now their time to get ahead of the problem is up. They didn’t wise up, and now they and the other companies like them are facing the consequences, slowly but surely.

 

[MacClueless]

Does Apple take commissions on in-app purchases from Amazon, eBay, etc?