South Korean app developers and content providers are raising their paid subscription and service fees on Google’s Play Marketplace due to the high 15-30% commissions now required by Google’s policy changes that force apps to use their first-party billing and payment system. While South Korean law allows app developers to use a third-party payment option, this only reduces Google’s commission by 4% – and that’s not enough, developers say. Developers are also frustrated that they can not add links pointing to their own website inside their app, which would allow their users to purchase directly and completely bypass Google billing.
Many South Korean non-gaming platforms, such as over-the-top (OTT), music streaming, web cartoons and digital books apps, mainly adopted web payments via an in-app link to an external site. They preferred this system because the payment option for weblinks does not require commission fees from app developers, and Google’s payment in the app was not mandatory for non-gaming apps until the end of May this year, said sources familiar with the situation. However, as of June 1, these platforms must use Google’s in-app payment or third-party payment option.
According to the US tech giant’s blog, “all developers selling digital goods and services in their apps are required to use Google Play’s billing system,” specifying that apps using external payment links will be removed from the Google Play Store from June 2022, to comply with Google’s payment policy.
This follows Google’s previous decision to support third party payments in South Korea. Google said in November last year that it would support alternative billing systems in South Korea in line with the country’s in-app payment law – the first of its kind in the world – by allowing Android app developers to use alternative payment options with Google’s own, after South Korea passed a bill banning app market operators like Google and Apple from forcing apps to use tech giants’ own in-app payment systems in September.
According to the statement released by the Korea Communications Commission in early April, the ban on app developers from using the web link payment option would be in violation of South Korea’s app payment law, which requires app store operators to allow third-party payments. KCC told TechCrunch that it will continue to monitor Google as to whether the U.S. technology giant is forcing apps to use Google’s own payment system on the Google Play Marketplace for Android app users in Korea, and whether it removes apps for using web link payment.
South Korean webtone platforms – Naver Webtoon and Kakao Entertainment – recently said they will increase their fee rate when users download their apps and services. However, the two webtone companies will not charge their fee for transactions made through the web, because Google’s billing policy only affects in-app payments.
Several content providers, including over-the-top platforms, digital books and music streaming apps, are poised to increase their service charges in South Korea.
Over-the-top (OTT) platforms like Korean telecommunications company SK Telecoms Wavve, CJ ENM’s TV and KT’s Seezn increased their subscription fees by approximately 16.7%, while music streaming services such as Naver’s Vibe and SK Telecoms Flo also increased their service fees by approximately 16%.
Google declined to comment.