What are Apple’s options in South Korea?

The National Assembly of Samsung’s home country has passed a bill that forces Apple and Google to allow alternative app payment systems.

Apple’s options, as I see them:

Take it to court The U.N’s Economic Court of Justice, that is. Apple has good lawyers and is not afraid to litigate, but this court’s enforcement record is mixed.

Pay the fine The penalty for ignoring the law is 3% of Apple’s South Korean earnings. Based on Apple’s reported 2020 revenue for Rest of Asia, that would probably come to less than $500 million.

Swallow the loss It’s only 15% to 30% of the revenue of software developers large enough to run their own payment system. Apple could afford it — or find a way to pass on the cost.

Leave the country Or any other country that passes such a law. Only Apple knows what price it is willing to pay to keep the garden walls intact.

My take: Apple will fight like hell, but in the end will follow the laws of every country in which it does business.

11 Comments

  1. Lalit Jagtap said:
    I am not worried about Apple, as it can handle S. Korea challenge. But intrigued by Google response as per TheVerge.com post on this topic, makes me think the android will not be free in S.Korea.
    Google defended its service fees, which it says “helps keep Android free,” and gives developers “the tools and global platform to access billions of consumers around the world.”

    0
    August 31, 2021
    • Gregg Thurman said:
      As soon as Google starts charging for Android manufacturers are going to want a share of advertising revenue.

      When iOS knock off Android was introduced Google should have charged ($40?) or it, AND kept the advertising revenue a separate (unseen?) issue. I say $40 because that is what computer OEMs pay Microsoft for Windows.

      0
      August 31, 2021
    • Steven Noyes said:
      It keeps XCode free as well. $100/year subscription cost to publish is a give-away. I don’t want to return to $500 compilers, $300 assemblers and high dollar dev tools simply because politicians are taking money from Epic.

      0
      August 31, 2021
  2. Gregg Thurman said:
    Apple will file suit and get a stay against enforcement until the suit is settled. Throw in appeals and that could be a very long time before the law adversely (if at all) impacts Apple’s revenue.

    My feeling is that during litigation political realities will change, as well as the hysteria surrounding the issue.

    2
    August 31, 2021
  3. John Konopka said:
    I guess they’d pay the fine. Better that than setting a precedent for changing payment methods. Also, adding on other payment methods may not be that easy. Will the payment flow through Apple? If customers pay outside of Apple, how does the App Store know that it is OK to download an app? Maybe payment outside of Apple would get you a license key to unlock an app you downloaded? Would there then be free and paid-for tiers?

    On MacOS I mostly buy apps through the App Store, but sometimes buy directly just because you can get more features that way. This has to do how Apple locks down apps sold through the App Store.

    2
    August 31, 2021
  4. Gary Gouriluk said:
    No more free apps! Flat download fee of 1.00 on every download and update! No more percentages.

    1
    August 31, 2021
  5. Greg Lippert said:
    How flawed. How is this legal or fair? I read its only for Apple and Google and does not apply to Samsung or console makers like xBox, PlayStation, Nintendo.

    I agree that I would no longer allow for free apps with in app purchasing, the apps must cost money up front if using 3rd party payment.

    In this scenario, A&G must review, approve (and all that goes into that) host, display and manage the app on the store for FREE with no chance to get any cut from developer. And when there is an issue they will have to deal with the complaints and even if they say its not my problem, tarnish their brand and image. Madness!!!!

    0
    September 1, 2021
  6. Dan Scropos said:
    Swallow The Loss. Some of these will be boomerang accounts. That is, after a few hacks of personal information and/or user unfriendly experiences, they’ll sprint back to Apple’s payment system.

    The writing is on the wall here. Too many governments are making this more about political optics than rule of law and the current state of the world says that Apple is fighting an uphill battle, as well as an impossible-to-win game of Public Relations chess. I never thought I’d write that. 🙁

    0
    September 1, 2021
  7. Michael Goldfeder said:
    @ Greg Lippert:

    On the bright side, with flawed laws like this one being passed, then the Apple 3.0 member who raises bees and sells his own honey (I apologize for not remembering your name) will no longer have to do so at outdoor venues. He can simply walk into any Costco, Wal Mart, Albertson’s, Piggly Wiggly, Aldi’s, or any other store of his choosing and set up shop.

    If any of these “Stores” deny him his absolute right to reach consumers directly, then he can call up Kahn, Vestager, Ciccillini, Klobuchar, and the rest of these brain challenged politicians and have them file an immediate antitrust enforcement action on his behalf as they’re: “stifling innovation and harming consumers!” After all, these markets are all public utilities where consumers buy food and other consumer staples.

    2
    September 1, 2021

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