Google Announces Plan for Compliance With South Korean ‘App Stores Must Offer Alternative In-App Payments’ Law, and It’s Something

Wilson White, senior director of public policy, on Google’s Korean developer blog:

Service fees for distributing apps via Android and Google Play will continue to be based on digital sales on the platform. 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%. As another example, certain categories of apps participating in our Media Experience Program, such as an eBooks provider, will pay a 10% service fee for transactions made via Google Play’s billing system, but only 6% for transactions on an alternative system.

If you just start reading from the beginning, it sounds like they are proposing what many of us thought Google (and Apple) might have to offer to comply with South Korea’s new law: the option for third-party apps to completely circumvent paying Google a fee on in-app transactions. But what they’re actually proposing is that if third party apps want to offer their own credit card processing, they can, but (a) only alongside Google Play, and (b) they still owe Google for most of the fees.

As Ben Thompson observed on today’s episode of Dithering, for small transactions — like the ones typically offered in games — credit card fees are likely in the 5-6 percent range. So if this flies, Google’s revenue per in-app transaction for apps from the Play Store isn’t going to effectively change at all.

Is it going to fly? Like I’ve said, stock up on popcorn.

★ Friday, 5 November 2021