South Korea sets a precedent, Apple’s App Store opens to third-party payments for the first time

The emergence of Apple's App Store is actually a compromise choice for Steve Jobs.

The system on the first generation iPhone was not iOS as we know it, but iPhone OS, which was more closed in comparison.

Jobs doesn't allow the iPhone to download apps, he doesn't want the developer's app to infect the phone with a virus, and the build can only install apps developed by Apple itself.

Scott Forstall, vice president of software leading the iPhone OS, advocates opening the iPhone ecosystem to developers, and the Apple software team is responsible for constructing a protection measure to prevent malicious apps from appearing on the iPhone.

▲ From left to right are: Scott Forstall, Steve Jobs, Phil Schiller Picture from: zimbio

Later, under pressure from Apple's board, Jobs finally compromised and agreed with Forstall to create the App Store he envisioned.

At the App Store conference, Forstall also replaced Jobs and introduced the corresponding developer tools, development environment and so on.

Today, the App Store and its derivative Apple software services, second only to iPhone hardware, account for nearly 20% of Apple's revenue.

Even, with the help of the App Store, Apple made $8.5 billion in profits from the gaming business in 2019, which is $2 billion more than the combined profits of Sony, Microsoft, Nintendo, Activision and Blizzard.

And, including Apple Music and iCloud services, the number of paying users in the App Store has exceeded 745 million, making it a big one.

As Scott Forstall imagined, Apple's App Store is open to third-party developers, who play more like a supervisory role.

Big developers don't want to pay 30% Apple tax

Aside from Apple's own services such as Apple Music and iCloud, the App Store's revenue is mainly based on a 30% commission.

Hundreds of millions of downloads, subscriptions, purchases, etc., as long as funds are involved, Apple will charge a 30% commission from it. This is not Apple’s first initiative. Now any software download platform will have a corresponding proportion of the commission, and 30%. % is also a common number in the industry.

Including software platforms such as the App Store and Google Play Store, as well as the Sony PlayStation and Microsoft Stores in the host field, all adopt a 30% ratio.

At the same time, both Apple and Google have already established their own payment systems, so for consumption on the corresponding platforms, you can only choose Apple Pay in the App Store or Android Pay in the Play Store.

With the enhancement of public awareness of copyright and the reduction of the distribution value of the App Store, many large game developers do not want to share a share of the pie with Apple and Google.

The representatives of these are Epic's "Fortress Night" and Spotify, which already have a sufficient number of users, and are even ahead of the corresponding businesses of Apple and Google in business, and do not have to rely on the user dividends brought by the App Store or Play Store.

▲ In "Endgame", Thor is also playing Fortnite

So Epic designed a web payment system within Fortnite to skip the App Store's 30% cut. After the move was discovered by Apple, "Fortress Night" was directly removed from the shelves, and then a long-standing antitrust lawsuit between Epic and Apple broke out.

From the two fighting each other, to the court case against Bo, it has lasted for several years. Even if the US court issues a permanent injunction in September 2021, Apple cannot continue to prohibit developers from choosing third-party payment, and Apple is still appealing to postpone the injunction effective.

▲ Epic imitates Apple's "1984" ad

The battle between Epic and Apple is still raging, and it's just as stinky and long as the episodes of The Walking Dead.

Antitrust regulations roll out to restrict App Store

Not only private companies such as Epic, but in response to the suspected monopoly of Apple's App Store, many government agencies have also issued corresponding regulations to restrict Apple.

▲ Online dating app oligarch, Match Group

As early as early 2021, Apple opened up third-party payments to dating apps at the request of the Dutch government. Although this is only a type of app for one country, it is considered by many media to be a big improvement for Apple.

Match Group (the world's largest online dating service provider) praised the Dutch government's decision, saying that the Dutch move created a level playing field and called on other countries and regions to get involved.

▲ The first Apple Store in Korea will open in April 2020

Also in the same year, South Korea passed the "Electrical Communications Business Law" in August, similar to the Netherlands, which mainly restricts Apple and Google from allowing developers to use third-party payments when distributing applications through the App Store and Google Play.

In the face of this regulation, Apple also appealed, hoping to postpone or modify it.

Whether it's the Epic war or the corresponding laws in South Korea, Apple's rhetoric revolves around the fact that the App Store is large enough to bring considerable benefits to developers.

According to Apple’s statistics, since the launch of the App Store, Apple has paid developers a total of $260 billion, and will pay developers $60 billion in 2021 alone, accounting for 70% and 85% of Apple’s total App Store revenue.

▲ Earlier than Apple, Google has adjusted its own Play Store policy, supporting third-party payment in November 2021, and the commission ratio is the same as 26%. Image from: macrumors

On the other hand, nature is security. After providing third-party payment, Apple said it is difficult to supervise and maintain the same good atmosphere in the App Store.

The tug-of-war lasts until the end of June 2022, and just in July, Apple adjusted its App Store-related policies in South Korea to comply with South Korean laws and regulations.

In Korea, Apple pioneered third-party payment

Since July, Apple has allowed applications in the Korean App Store to use third-party payment, and South Korea has also set a precedent. Apple’s compromise is a good signal, whether it is for the Epic war or other countries and regions that may introduce antitrust regulations. .

However, after studying the developer documentation provided by Apple, developers who want to use third-party payment, and users who want to purchase apps through third-party payment, are not so worried.

It could even be said that for third-party payments, Apple offers a different software platform within the Korean App Store.

For developers, to use third-party payment, a special version of the app needs to be provided in the Korean App Store, and it is only available in the Korean region.

In addition, the third-party payment service providers are limited to KCP, Inicis, Toss, and NICE. For access to other payment platforms, developers need to apply to Apple.

On the most critical issue, Apple has not compromised, and will still take 26% of the commission, which is not much different from the original App Store's 15% to 30% commission (15% for small and medium developers).

In this way, Apple is only abiding by the opening of third-party payment services, and the cancellation of the "Apple tax" is not within the scope, and the core issue remains unchanged.

For users, if the app is purchased through a third-party payment system in the Korean region, the original functions such as family sharing and inquiry before purchase will not be available, and Apple will not participate in app subscription management and refunds.

Similar to the current self-operated and non-self-operated channels of B2C malls, self-operated has the advantages of after-sales and distribution, while the advantage of non-self-operated is the price, but consumers need to make their own judgments.

The core issue remains the same

Earlier, Apple gave the green light to third-party payments for online dating apps in the Netherlands. At that time, many agencies said that developers could save millions of dollars through third-party payment platforms, thereby increasing developers' profits or reducing subscription fees. .

SensorTower said in 2019 that the top 1% of app developers generate 93% of App Store and Google Play Store revenue. Urging Apple to open up third-party payment platforms is more likely to be behind the 1% of large app developers.

Not just the big app developers, but platforms offering third-party payments are also waiting. Paddle is designing a third-party payment system for iOS and positioning itself as a direct competitor to Apple Pay.

Paddle plans to charge 10% commission on transactions under $10, and 5% and 50 cents on transactions over $10.

However, after Apple Korea's App Store third-party payment policy was launched, even if the third-party platform only charged a small part of the commission, including the 26% Apple tax, it seemed uncompetitive in front of the original 30% commission.

What's more, Apple does not provide a consistent service and after-sales system when purchasing apps through third parties.

Apple opened third-party payment in the Korean App Store, setting a precedent, but still has a 26% commission. The price advantage of the original third-party payment system is difficult to reflect.

For large developers, it is difficult to save money, and for users, the price advantage of subscribing to buy apps is not large. The open third-party payment system is temporarily difficult to shake the original ecosystem of the App Store.

The opening that Apple has done is more like a compromise with South Korean laws and regulations, but in the best sense, it is also the beginning of change.

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