A crack in Apple’s walled garden appeared yesterday as the iPhone vendor opened up an option for alternative in-app payment processing within apps distributed in South Korea.
The commission levied by Apple for in-app transactions, which can be up to 30 percent, has long irked app developers. Epic Games famously went before US courts to protest Apple’s rules and lost.
South Korea’s lawmakers, however, took matters into their own hands and targeted Google and Apple with a law requiring both to open their app stores to third party payment options. Google made its update at the beginning of the year, effectively cutting its service fee by four percent.
Looking like it has been dragged kicking and screaming toward compliance, Apple on Thursday issued a developer update that, frankly, reads very much the company intends to make things as arduous as possible for anyone seeking to distribute an app in South Korea and does not use the company’s own payment platform.
Developers willing to jump through the company’s hoops can use the StoreKit External Purchase Entitlement, which allows apps distributed in the App Store solely in South Korea to use an alternative payment system.
Er, no. As one would expect, App Store features like Ask to Buy and Family Sharing are not present, and issue resolution around payment is dumped squarely in the developer’s lap. The app must also be a new binary distributed solely on the South Korea storefront.
Still, at least you get to keep all the cash, right?
Er, no again. Digging deeper into what the StoreKit External Purchaser Entitlement means for apps in South Korea, one quickly comes across this line: “Apps that are granted an entitlement to use a third-party in-app payment provider will pay Apple a commission on transactions. Apple will charge a 26% commission on the price paid by the user, gross of any value-added taxes.”
Developers using the entitlement must provide Apple a report of sales and make payment accordingly. Audits can also be performed to check everything is above board. Oh, and “if Apple develops technical solutions to facilitate reporting, developers will be required to adopt such technologies.”
It is unsurprising that Apple should decide to make using payment systems other than its own as unattractive as possible, with the 26 percent commission rubbing salt into the wound. The Register contacted the Korean Communications Commission to see what it made of Apple’s rules and will update should a response be forthcoming.
In the meantime, Apple and its app store competitors are coming under increasing scrutiny around the world, with regulators in the EU and US taking a keen interest in their activities. After the Dutch dating experience, the South Korea update indicates that there is still a way to go. ®