by DEVANSHI SRIVASTAVA
It may be the first formal development with such restrictions on tech companies, but the decision may set a precedent for other jurisdictions, including India, where an antitrust regulator has already filed a complaint against in-app billing processes.
On 1st September, 2021, South Korea became the first country to officially prohibit Apple and Google’s in-app purchase monopoly. This historic judgement may drastically alter how platform firms like Google and Apple compel developers to utilise their payment systems for in-app purchases.
Reuters reported that the changes were approved by 180 votes out of 188 in the South Korean National Assembly. While Google said that its present approach keeps device prices low for customers by keeping Android free, Apple stated that this would reduce App Store sales.
Apple and Google, who operate the most popular app stores, require that all in-app payments go via their own processing system, for which they charge commissions ranging from 15% to 30%.
In some countries, governments have investigated these tactics, while in others, app developers have protested, including a large class-action lawsuit in the US against Apple, where a settlement deal has been suggested. This deal involves a $100 million settlement and Apple altering its App Store rules to enable developers to contact customers about non-App Store payment alternatives. Experts say that although this move may be beneficial to developers, it falls short of what they really want — an alternate payment method and a means to inform consumers from inside the app.
Aside from the European Commission’s inquiry into Apple’s practises, Europe has adopted the Digital Markets Act, which threatens huge penalties for big digital firms that favour their own services and goods over smaller rivals.
US senators have also proposed a bipartisan measure to remove Apple and Google’s app development limitations. To reach customers, app developers claim they are compelled to accept specific contractual requirements from big app shops.
Earlier this year, Google said it will lower its Play Store service fee to 15% for the first $1 million in sales. The 15% fee is imposed annually to all app developers that provide in-app items, subscriptions, or commodities. For example, a gaming app that sells in-app goods must pay Google 15% of the first $1 million in sales. Developers who earn more than this will be charged a 30% service fee.
However, the firm had already received harsh criticism from Indian developers when it revealed intentions to collect a 30% fee from the Play Store for any digital products sold inside the app. It also required developers to use the Play Store charging mechanism for in-app purchases. Former Paytm CEO Vijay Shekhar Sharma has frequently called this charge a ‘tax’ and said that Indian developers should have their own app store. Sharma has also asked the government and authorities to intervene. The Alliance of Digital India Foundation (ADIF) applauded South Korea’s move. “We hope that this will now accelerate similar laws by other countries. Forcing a payment choice and driving out alternative payment providers has always been the issue. We urge Apple and Google to follow the spirit of the law and implement more equitable practises moving forward. “Unfair markets and anti-competitive behaviours hinder innovation and harm market outcomes,” said ADIF executive director Sijo Kuruvilla George.
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