Japanese and South Korean regulators upset the app cart
Regulatory action in Japan and South Korea is ushering in significant changes to app store billing, with Apple set to feel the biggest impact. The move means that telcos could see new opportunities for direct carrier billing.
02 Sep 2021
Japanese and South Korean regulators upset the app cart
Regulatory action in Japan and South Korea is ushering in significant changes to app store billing, with Apple set to feel the biggest impact. The changes mean that telcos could see new opportunities for direct carrier billing.
Apple has announced it will allow third-party billing within its iOS reader apps as of next year, as a result of an investigation by Japan’s anti-trust regulator. Apple’s concession put an end to the investigation, which had been going on for five years, according to Reuters.
Now, providers of apps for video, audio, books, magazines and music, such as Netflix or Spotify, can give their users links to pay them directly, thereby enabling developers to avoid paying Apple a 30% App Store fee. However, Apple’s decision does not extend to gaming.
“It will be interesting to see what Google does now, since matching Apple’s move would mean it is reversing its move in September 2020 to make app-store billing mandatory on these kinds of apps,” says Guillermo Escofet, Principal Analyst, Consumer Platforms and AI, Media & Entertainment, Omdia.
South Korea’s regulator went even further, albeit in a smaller market, that is dominated by Samsung. It has prevented both Google and Apple from mandating use of their in-app payment systems.
"It now remains to be seen if Apple’s announcement is enough to defuse any further regulatory crackdowns from European and North American authorities,” says Escofet.
“The announcement will satisfy the likes of Netflix and Spotify,” he says, pointing out that the latter has been the main instigator of an Apple antitrust probe by the European Commission. “But it won’t satisfy Epic Games or other gaming companies, which will still be subject to a ban on non-app-store billing.”
Nor does it remove the formidable competitive threat that Google Pay and Apple Pay pose to mobile money wallets used to pay for physical goods and services in developed markets, says Escofet.
Apple has announced it will allow third-party billing within its iOS reader apps as of next year, as a result of an investigation by Japan’s anti-trust regulator. Apple’s concession put an end to the investigation, which had been going on for five years, according to Reuters.
Now, providers of apps for video, audio, books, magazines and music, such as Netflix or Spotify, can give their users links to pay them directly, thereby enabling developers to avoid paying Apple a 30% App Store fee. However, Apple’s decision does not extend to gaming.
“It will be interesting to see what Google does now, since matching Apple’s move would mean it is reversing its move in September 2020 to make app-store billing mandatory on these kinds of apps,” says Guillermo Escofet, Principal Analyst, Consumer Platforms and AI, Media & Entertainment, Omdia.
South Korea’s regulator went even further, albeit in a smaller market, that is dominated by Samsung. It has prevented both Google and Apple from mandating use of their in-app payment systems.
“The actions by Japanese and Korean authorities underline the trend among regulators to take a stronger line with major technology platforms,” says David Pringle, Associate Senior Analyst, STL Partners.
"It now remains to be seen if Apple’s announcement is enough to defuse any further regulatory crackdowns from European and North American authorities,” says Escofet.
“The announcement will satisfy the likes of Netflix and Spotify,” he says, pointing out that the latter has been the main instigator of an Apple antitrust probe by the European Commission. “But it won’t satisfy Epic Games or other gaming companies, which will still be subject to a ban on non-app-store billing.”
Nor does it remove the formidable competitive threat that Google Pay and Apple Pay pose to mobile money wallets used to pay for physical goods and services in developed markets, says Escofet.
Nonetheless, “CSPs have the opportunity to gain a stake in app store billing by allowing Apple and Google to hook up to direct carrier billing or carrier mobile money wallets,” he says, and in particular with Google, which offers more favorable financial terms.
