South Korea passed the first law to free app creators from Apple and Google’s fees

Fortnite loading on Android.
Fortnite loading on Android.
Image: REUTERS/Dado Ruvic
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Apple and Google have long enjoyed total control over their respective app marketplaces, but in South Korea, the landscape is about to change drastically.

The country’s legislature passed a new bill on Tuesday (Aug. 31) that will let mobile app developers on Apple’s iOS and Google’s Android operating system bypass the tech giants’ hefty fees for in-app transactions. It’s expected to be signed into law shortly by president Moon Jae-in, whose party spearheaded the legislation.

This marks a major victory for developers who have criticized Apple and Google’s dominance over the mobile app industry. Mobile apps brought in $111 billion in revenue globally in 2020. A large chunk of that went to Apple and Google.

App stores typically charge developers 30% for every in-app transaction made by a user, though Apple and Google essentially lowered the cuts to 15% for smaller developers last year. The fees only affect digital goods, like special features in a mobile game, rather than physical ones, which is why some large developers like Uber do not pay.

Some of the biggest critics of app store fees are Epic Games, the maker of the popular video game Fortnite, and Spotify, which competes directly with Apple and Google’s music offerings. Last year, Epic introduced its own payment system, breaking Apple and Google’s rules, and was booted off the app stores. Epic sued the two companies in separate lawsuits, both of which are ongoing.

On Twitter, Epic CEO Tim Sweeney called South Korea’s law a “major milestone in the 45-year history of personal computing,” celebrating that the country “rejected digital commerce monopolies and recognized open platforms as a right.”

Apple and Google push back

In a statement to Quartz, Apple said the law will put users “at risk of fraud, undermine their privacy protections, make it difficult to manage their purchases,” as well as undermine parental controls on its platform. The company said it has 482,000 registered developers in South Korea, which have made more than KRW 8.55 trillion ($7.3 billion) to date through its platform. Google told Quartz charging fees “keeps device costs low for consumers and enables both platforms and developers to succeed financially.”

A law targeting app store fees has been introduced in the US Senate, and government officials elsewhere, including in the European Union and the UK, are investigating whether the app stores violate anti-trust rules.

Meghan DiMuzio, who leads the US-based lobbying group Coalition for App Fairness, said in a statement the new law will “hold app store gatekeepers accountable for their harmful and anti-competitive practices.”