Media & Entertainment

South Korean content providers raise service fees in the wake of Google’s in-app payment policy

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South Korean app developers and content providers are upping their paid subscription and service fees on Google’s Play marketplace due to the heavy 15-30% commissions now required following Google’s policy changes that force apps to use its first-party billings and payments system. While South Korean law permits app developers to use a third-party payment option, this only reduces Google’s commission by 4% — and that’s not enough, developers believe. The developers are also frustrated that they can’t add links that point to their own website inside their app, which would allow their users to buy directly, bypassing Google’s billing entirely.

Many South Korean non-game platforms, like over-the-top (OTT), music streaming, web cartoons and digital books apps, mainly adopted web payments through an in-app link to an outside website. They preferred this system because the weblink payment option does not require commission fees from app developers and Google’s in-app payment was not mandatory for non-game apps until the end of May this year, sources familiar with the situation said. But from June 1st, those platforms must use Google’s in-app payment or the third-party payment option.

According to the U.S. tech giant’s blog, “all developers selling digital goods and services in their apps are required to use Google Play’s billing system,” and clarified that apps using external payment links will be removed from Google Play Store, starting in June 2022, in order to comply with Google’s payment policy.

This follows Google’s earlier decision to support third-party payments in South Korea. Google said in November last year it would support alternative billing systems in South Korea following 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 alongside Google’s own after South Korea passed a bill that prohibits the app market operators like Google and Apple from forcing apps to use the tech giants’ own in-app payment systems in September.

According to the statement released by the Korea Communications Commission in early April, the prohibition of app developers from using the weblink payment option would breach South Korea’s app payment law that requires operators of app stores to allow third-party payments. The KCC told TechCrunch it will keep monitoring Google as to whether the U.S. tech giant forces apps to use Google’s own payment system on the Google Play marketplace for Android app users in Korea and if it removes apps for using weblink payment.

South Korean webtoon platforms — Naver Webtoon and Kakao Entertainment — said recently that they will increase their fee rate when users download their apps and services. But the two webtoon companies will not raise their fee for transactions made through the web because Google’s billing policy only affects in-app payments. 

More content providers, including over-to-top platforms, digital books and music streaming apps, are poised to increase their service fees in South Korea.

Over-the-top (OTT) platforms like Korean telco company SK Telecom’s WavveCJ ENM’s TVing and KT’s Seezn increased their subscription fees by approximately 16.7%, while music streaming services such as Naver’s Vibe and SK Telecom’s Flo also upped service fees by around 16%. 

Google declined to comment.

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