Apple concedes to South Korean law, opens up third-party app payments

In its development update, Apple said it had the right to audit developers’ sales records as part of its terms and conditions.

App Store South Korea
Apple will also require apps that take advantage of the policy to report all sales every month and pay a 26% commission on those sales. (File/Reuters)

Apple has opened up third-party payment options for app developers in South Korea, albeit with certain riders, to comply with the country’s fair-trade laws. The tech giant will allow developers to use the StoreKit External Purchase Entitlement, allowing “apps distributed on the App Store solely in South Korea the ability to provide an alternative in-app payment processing option,” the company said.

However, Apple has clarified that “some App Store features, such as Ask to Buy and Family Sharing, will not be available to your users, in part because we cannot validate payments that take place outside of the App Store’s private and secure payment system” if they use the entitlement.

Apple will also require apps that take advantage of the policy to report all sales every month and pay a 26% commission on those sales. At present, the iPhone maker collects between 15% and 30% of app sales and in-app purchases.

The policy update follows a South Korean law last year and only affects the App Store in the country. But it could signal how the Cupertino-based tech giant plans to handle third-party billing if other countries and/or regulators decide to follow South Korea.

In its development update, Apple said it had the right to audit developers’ sales records as part of its terms and conditions.

“This will allow Apple to review the accuracy of a developer’s record of digital transactions as a result of the entitlement, ensuring the appropriate commission has been paid to Apple.”

Third-party billing was the major issue in Apple’s lawsuit against Epic Games, which is in the appeal stage at present. Epic Games wanted to point users playing Fortnite on the iPhone to its website to buy in-game currency inside the app. Apple said it violated its rules and bypassed the commission.

Epic Games also supported the South Korean law with CEO Tim Sweeney appearing at a conference in the country last year to praise it.

Apple is also facing several other regulatory challenges that could force it to take similar actions in other markets.

The European Union is in discussions over the Digital Markets Act, which would force Apple to allow third-party payment providers on the App Store and open the door to third-party app stores on the iPhone. 

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