Apple agrees to Korean app's own payment systems

Apple will allow Korean app developers to use their own in-app purchase systems, a first for the U.S. tech company. This is part of Apple's compliance with the "Anti-Google law" passed by the National Assembly last August. However, Apple failed ..

A person is silhouetted against a logo sign of the Apple Store in the Grand Central Terminal in the Manhattan borough of New York City, New York, U.S., Jan. 4. [REUTERS/YONHAP]

Apple will allow Korean app developers to use their own in-app purchase systems, a first for the U.S. tech company.

This is part of Apple's compliance with the "Anti-Google law" passed by the National Assembly last August.

However, Apple failed to deliver essential details such as the maximum commission rate it will allow, according to data revealed to the local press by the Korea Communications Commission (KCC) on Tuesday.

According to the KCC, the California-based tech company submitted a proposal to the KCC on Friday explaining how it will abide by the new law, which was a revision to the Telecommunications Business Act.

The Anti-Google law was intended to keep big tech companies from forcing their own commissions on app developers, which could raise costs for consumers and deprive developers of potential revenues.

This will be the first time Apple officially permits third-party purchase systems. The Anti-Google law prohibits app market operators from forcing the use of their in-app purchase systems on developers or demanding commissions.

Apple's proposal was “very broad,” according to a KCC official, and did not include details on how the company plans new payment policies.

The only information that Apple did share was that the commission rate will be lower than the 30 percent it currently charges for all apps in its app market.

“The KCC will carry out additional talks with Apple to work on the details and scrutinize its plans based on the demands of the local market,” the KCC said.

The most likely scenario is that Apple will follow Google, according to an industry insider who wished to remain anonymous.

“Google said it will ‘abide by the law’ then came up with the best possible way to get around it,” the insider said. “There’s really nothing to comment on because Apple hasn’t given any details. But it is worrying that if the two companies fail to fully comply, the law will have no real effect on reality.”

Google cut commissions on Korean apps that use third-party billing services with a new policy implemented from Dec. 18, rather than completely waiving commissions.

The rate is 26 percent for games, 6 percent for apps signed on to the Media Experience Program — primarily offering video, audio or e-books — and 11 percent for all others. All new rates are 4 percentage points lower than the previous payment system commissions.

The KCC is also in talks with Google to set clearer guidelines, including specific examples of what actions would be deemed illegal or coercive, the KCC said.

“Both Google and Apple are aware that critics are calling their policies gimmicks,” a KCC official said. “We will be working more closely with the two companies to come to a more detailed decision.”

Apple and Google are facing regulatory obstacles elsewhere in the world, especially in Europe and the United States.

On Dec. 24, the Netherlands Authority for Consumers and Markets (ACM) said it ordered Apple to "adjust the unreasonable conditions in its App Store" and to allow dating app consumers to choose payment systems freely. The ACM gave Apple two months to comply, or pay 5 million euros ($5.7 million) per week up to a maximum of 50 million euros.

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]