Today, Google announced that it would modify its in-app payments (IAP) in South Korea to allow third-party payment options alongside its proprietary Google Play billing system in Android apps. This is a significant step for the search giant as governments around the world are lobbying to curb Google and Apple’s tight control over Android and iOS ecosystems, respectively.
Google is modifying its terms to comply with a recent legislation passed in South Korea in August 2021 that has since been dubbed “Google power-abuse-prevention law” by the South Korean media. Among other things, it intends to stop operators of large app stores (including Google and Apple) from mandating that developers only use proprietary IAP systems. The legislation is the first of its kind to direct such changes to the Android and iOS ecosystems. Similar legislation has been deliberated in the US and in Europe since it has been the subject of contentious lawsuits, including the one between Fortnite developer Epic Games and Apple.
Google revealed that to comply with the law, it will allow third-party IAP systems but developers would be charged a fee if their customers use these systems. Thankfully, the fee will be reduced slightly as compensation for the costs of supporting third parties.
Service fees for distributing apps via Android and Google Play will continue to be based on digital sales on the platform. We recognize, however, that developers will incur costs to support their billing system, so when a user selects alternative billing, we will reduce the developer’s service fee by 4%. For example, for the vast majority of developers who pay 15% for transactions through Google Play’s billing system, their service fee for transactions through the alternate billing system would be 11%. As another example, certain categories of apps participating in our Media Experience Program, such as an eBooks provider, will pay a 10% service fee for transactions made via Google Play’s billing system, but only 6% for transactions on an alternative system.
The search giant claims that this approach will ensure compliance with South Korean law while ensuring the Google Play ecosystem continues to develop, thanks to the 30 percent commission on IAPs that developers part with even today.
Apple criticized the country’s law, but it hasn’t announced any changes to its IAP system in South Korea in response. It reportedly told the government that its current policies align with the laws. The Wall Street Journal noted that the exact words of the legislation may allow Apple to escape unscathed since the law doesn’t regulate commissions directly, but says application developers must not be forced to choose specific payment methods because of “unreasonable” commissions. Apple will only be subject to an investigation into its practices if the Korea Communications Commission finds its fees unreasonable.[Via Google Developers Korea Blog]