What you need to know
- New laws in South Korea are going to force Apple and Google to offer alternative billing methods in their app stores.
- Google has unveiled how it plans to comply.
- It could be our first glimpse at how Apple may look to fall in line.
Google has today announced how it plans to comply with South Korea's new laws that will force operators like Apple to offer alternative payment methods in their app stores, possibly offering a glimpse at how Apple might also comply.
Google today stated:
The South Korean government recently passed a law regarding app stores and billing systems for users in South Korea. We respect the decision of the National Assembly, and we are sharing some changes to respond to this new law, including giving developers that sell in-app digital goods and services the option to add an alternative in-app billing system alongside Google Play's billing system for their users in South Korea. These changes will allow us to comply with the law, continue to invest in Android and Google Play, and provide the seamless, safe and trusted user experience billions of people expect from Google Play.
The new changes are straightforward enough, developers will now be able to add an alternative in-app billing system alongside Google Play, with users picking from whichever option they like at the checkout, as shown below.
Google notes alternative billing systems "may not offer the same protections or payment options" and could break features like parental controls, subscription management, and family payment methods, as well as Google Play gift cards.
What is interesting, is that Google still plans to collect commission on these payments, but at a slightly lower rate than Google Play payments. It notes "we need to have a sustainable model to continue to improve our products while maintaining important user protections" and that the Google Play Store and Android are free, funded instead through fees charged for purchasing digital content. After justifying what it spends the money on and noting 97% of Google Play developers don't sell digital content, it says that it will reduce fees on alternative billings by 4%, charging 11% instead of 15%:
We recognize, however, that developers will incur costs to support their billing system, so when a user selects alternative billing, we will reduce the developer's service fee by 4%. For example, for the vast majority of developers who pay 15% for transactions through Google Play's billing system, their service fee for transactions through the alternate billing system would be 11%.
Google notes this is to offset the extra cost developers will incur offering alternative payments, presumably setting the expectation that these prices won't be much cheaper (if any) than Google Play payments.
Apple has been asked for its own plan to comply with the laws, so this is an interesting look at what that could look like. Certainly, it reinforces Tim Cook's previous assertion that Apple would still charge commission on alternative payments, just like Google plans to do so here. According to Reuters, Apple has told South Korea that it already complied with the new legislation and didn't need to change its App Store. However, a Korea Communications Commission official told the outlet anonymously in October that "this goes against the purpose of the amended law."