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Apple To Let Some Apps Facilitate Third-Party In-App Payment Systems

Apple will now allow "reader apps" to direct users to third-party websites where people can sign up for subscriptions. Reader apps provide access to paid content or content subscriptions for digital newspapers, magazines, books, audio, music and videos.

Credit: Patrick Semansky / AP

"With the update announced today, the App Store continues to evolve to be an even better marketplace for users and developers alike," wrote Apple in a statement released on 1 September 2021.

The change will not cover all transactions on the App Store as only reader apps will be affected by it.

Previously, iOS app developers were not permitted to lead users to any third-party payment platform through their apps. This forced users to transact within Apple's in-app payment system, allowing the company to collect between 15% and 30% of gross sales.

This development came after South Korea passed a bill that will end Apple's App Store payment platform monopoly, preventing Apple, Google and other major platform owners from limiting app developers to built-in payment systems. It will become law once it is signed by President Moon Jae-in, whose party called for the legislation's passing.

The bill — an amendment to South Korea's Telecommunications Business Act — compels Apple and Google to allow the usage of third-party payment systems on their app stores. It also forbids large app-market operators to delay the approval of apps or delete them from their online marketplace without proper justification — rules set to keep platforms from retaliating against developers.

The Korea Communications Commission will fine companies up to 3% of their entire revenue in the country if they fail to comply.

In response to the legislation, Google argued that its service fees help "keep Android free" and that it provides app makers with "the tools and global platform to access billions of consumers around the world".

Credit: Mika Baumeister / Unsplash

"Just as it costs developers money to build an app, it costs us money to build and maintain an operating system and app store. We'll reflect on how to comply with this law while maintaining a model that supports a high-quality operating system and app store and we will share more in the coming weeks," Google said.

According to Han Sang-hyuk, Chairman of the Korea Communications Commission, the bill will impact legislative efforts around the world to curb anti-competitive practices of app market platforms.

"As bills with similar implications are being proposed in the U.S. and Europe, South Korea's bill will become a cornerstone for legislating app market platform regulations worldwide," said Han.

In December 2020, the European Union put forward the Digital Markets Act, which aims to prevent technology companies from gatekeeping online marketplaces. A similar bill called the Open Markets Act was introduced to the U.S. Senate, proposing that platforms should not be allowed to make it hard for developers to offer other in-app payment systems.

In Australia, government officials are eyeing regulations for services such as Apple Pay, Google Pay and WeChat Pay.


Written by Sophia Lopez


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