Apple in Korea climbdown after third-party payment ruling

The iPhone maker, which recently saw its market cap briefly top $3 trillion, returned to Earth with a bump this week.

Nick Wood

January 12, 2022

3 Min Read
Apple in Korea climbdown after third-party payment ruling

The iPhone maker, which recently saw its market cap briefly top $3 trillion, returned to Earth with a bump this week.

South Korea’s Yonhap news agency reported on Tuesday that Apple has submitted compliance plans relating to a new law that bans app store providers from forcing developers to use their in-app payment systems. These proprietary systems typically charge a high commission – in Apple’s case it’s up to 30% – every time a user makes an in-app purchase. It’s a source of consternation among app makers, which are clamouring for competition in this space.

Korea’s parliament in August became the first in the world to pass legislation requiring the likes of Apple and Google to offer alternative payment methods. Included as an amendment to the Telecommunications Business Act, it is enforced by the Korea Communications Commission (KCC), which has the power to fine rule-breakers as much as 3 percent of turnover generated in Korea. The new law came into effect in September, and the KCC gave app store operators until the end of 2021 to submit their compliance plans.

Google filed its submission in November, and rolled out a third-party payment policy for Google Play app developers in December. Funnily enough, Apple dragged its feet, with sources claiming in reports in December that it was waiting for more clarity on how the new law would be enforced.

It now appears that Apple has finally run out of road.

“We look forward to working with the KCC and our developer community on a solution that benefits our Korean users,” Apple said, in the Yonhap report. “Apple has a great deal of respect for Korea’s laws and a strong history of collaboration with the country’s talented app developers. Our work will always be guided by keeping the App Store a safe and trusted place for our users to download the apps they love.”

This contentious issue not limited to Korea, of course.

In September, a five-year antitrust investigation by Japan’s Fair Trade Commission into Apple’s app store practices culminated in the latter agreeing to let content-subscription apps like Netflix link to an external site so that users can sign up for an account. Not exactly an earth-shattering concession, and more than anything it serves to illustrate just how reluctant Apple is to loosen its stranglehold on app store payments.

The highest-profile clash on this side of the world saw Epic take Apple to court over its policy of restricting third-party payment methods, accusing the company of monopolistic practices. The lawsuit was filed in August 2020 after Apple removed Epic’s blockbuster game Fortnite from the App Store following Epic’s attempt to bypass Apple’s payment system. In September last year, a judge ruled largely in Apple’s favour, but ordered it to cease its policy of banning developers from informing users of alternative payment methods.

While the concessions in the US, Korea and Japan are frustratingly meagre, the hope is that momentum continues to build and more jurisdictions feel sufficiently emboldened to take action against these anti-competitive, monopolistic practices.

About the Author(s)

Nick Wood

Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.

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