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Brief Summary

This article discusses the ongoing issues with in-app purchases (IAP) and the efforts to regulate the app market dominance of Google and Apple. It covers the definition of IAP, the controversies surrounding high commission fees, and the actions taken by companies and governments to challenge these practices. The article also touches on South Korea's pioneering but ineffective law against forced IAP and the push for a "retaliation ban" to protect developers.

• In-app purchases (IAP) involve digital goods bought within apps, subject to high commission fees (up to 30%) charged by Google and Apple.
• Major companies like Netflix and Epic Games have challenged these fees, leading to legal battles and policy changes in the US and EU.
• The EU's Digital Markets Act (DMA) aims to curb the monopolistic practices of large IT platforms, resulting in significant fines for Apple and subsequent fee reductions.
• South Korea was the first country to ban forced IAP, but loopholes allow Google and Apple to maintain high fees, prompting calls for a "retaliation ban" to protect developers.

[Understanding In-App Purchases]

In-app purchases (IAP) refer to transactions made within mobile applications for digital goods, such as buying emoticons in KakaoTalk, purchasing items in mobile games, or paying for content subscriptions. When these purchases are made, app developers like Kakao pay up to 30% of the revenue to Apple or Google as app market fees because users are directed to use their payment systems. This high commission rate often results in higher prices for digital content within apps compared to purchasing directly from websites.

[Challenges to the Status Quo]

While many companies complied with Google and Apple's IAP policies, some, like Netflix, found ways to avoid the fees by directing users to their website for subscriptions. Epic Games challenged the IAP system by introducing its own payment system in "Fortnite," leading to its removal from the App Store and subsequent lawsuits against Apple and Google. The US courts acknowledged that Google and Apple had abused their monopolistic position by unfairly enforcing IAP, leading to settlements that allowed alternative payment methods and reduced commission rates.

[Government Intervention and Regulations]

The monopolistic power of Google and Apple in the app market has prompted government intervention, notably through the European Union's Digital Markets Act (DMA). The DMA, effective from March 2024, aims to prevent unfair practices by large IT platforms, including app market dominance. In April, the EU fined Apple 500 million euros for violating the DMA by restricting developers from informing users about cheaper alternatives to IAP. In response, Apple has appealed and announced new app store policies, including reduced commission rates, potentially dropping to as low as 10%.

[South Korea's Ineffective Law and the Call for a "Retaliation Ban"]

In March 2022, South Korea became the first country to ban forced in-app payments. However, Google and Apple circumvented the law by allowing external payment systems but charging a 26% commission, resulting in a total fee of over 30% for app developers. This has rendered the law ineffective, leading to calls from the gaming industry for a "retaliation ban" to prevent Google and Apple from punishing companies that adopt external payment systems. Despite legislative efforts and support from figures like Epic Games CEO Tim Sweeney, progress has been slow, and the government's response remains uncertain due to ongoing trade negotiations with the US.