• September 3, 2021

South Korea’s App Store law is a grand experiment | Opinion

It may not be an especially large market for the games industry in general, but time and time again South Korea has proven to be a market that it ignores at its own risk.

It is often ahead of the global curve, and for the past two decades, people have been constantly caught being too quick to dismiss major online gaming or media trends in South Korea as local phenomena that are never seen. They will become fashionable elsewhere. Korean trends may take a while to reflect overseas, but most of the time it happens last; South Korea was dramatically ahead of the curve in trends like esports and free game monetization, and was one of the first to advance a host of other influential trends, from Twitch-style game streaming to MOBAs. and Battle Royale games.

Now, once again, South Korea is about to get ahead of the curve and become something of a global test case for a highly contentious issue that will have a huge impact on the gaming business (and the technology sectors). and media in general). The country’s new law that prohibits App Store operators, including Apple and Google, from restricting in-app payments to their own payment processing systems is a gigantic experiment whose results and consequences will be closely watched by the parties. on both sides of the argument. how much these platforms should be regulated and by whom.

South Korea is about to effectively become a Petri dish for this kind of legislation, and once again the world should be watching what happens.

The actual parameters of the law will undoubtedly be investigated and questioned in court in the coming months, and what it means in practical terms will not be entirely clear until that process is completed, but the broad outlines of the legislation are similar. . to some of the reforms that Epic (the most famous) and others are advocating in other countries.

Going far beyond Apple’s announcement this week that it will allow apps to point users to alternative payment options outside of the app, South Korean law is designed to force platform owners to allow developers to applications offer alternative payment processing systems within the application itself. At first glance, this would mean that a free app with in-app purchases, such as a free game, could drive consumers to their own payment processing service for the IAP, effectively bypassing the operator’s payment system. store and therefore its share of the purchase price.

There are pretty solid arguments both for and against this regulation: enough global digital trade flows through these storefronts to justify governments taking an interest in how they operate, certainly, but on the other hand the claim that opening up to a A smorgasbord of payment processors and options will create significant security risks for consumers, which is also not unfounded. The issue of fairness is also thornier than advocates for either party like to imply; what is “fair” in this situation depends entirely on the perspective of who is taking, be it the owner of the platform (who built this platform and possibly has the right to charge a toll for its use), the consumer (who bought this device and possibly have the right to freely choose how they use it), or to the app developer (who created this app and possibly shouldn’t be obliged to hand over a large portion of their revenue to a platform holder in perpetuity).

South Korea’s new law will prohibit owners of platforms like Apple from forcing developers to use their proprietary payment systems.

I’m not going to go back to the merits of all these arguments, because South Korean law is about to make some of the hypothetical discussions irrelevant. What many of these arguments have been missing is data; Many people think they know how things will turn out if app stores are regulated and forced to poke a few holes in their walled gardens, but there isn’t much data to support one side or the other. Now South Korea is on the verge of effectively becoming a Petri dish for this kind of legislation, and once again, the world should be watching what happens, because similar moves are taking place through the courts or the legislative systems of the main markets. worldwide, including the United States and the EU.

It is notable in this context that South Korea is being quite specific in what it regulates here: it is forcing the platform holders to open up App Store payment processing, but it does not appear to have gone so far as to push for that. competing app stores can do it. operate on devices. That would have put the country more in line with China, where the fragmented situation of the Android App Store seems, frankly, to be hell for consumers; instead, South Korea’s proposals are more moderate and thus more in line with what EU and US lawmakers may be pondering in the months and years to come.

I have no doubt that as the consequences of this new law become apparent, in consumer choice, in security or in the business models and income of application and game developers, both parties will apply a lot of twist to the data. of the argument.

One extreme possibility, of course, is that Apple, Google, or both decide that this slippery slope is not worth treading for the relatively small (albeit lucrative) South Korean market; Both companies might shrug their shoulders, express regret, say they are unwilling to compromise user safety, and withdraw app store support from the South Korean market without particularly noticeable impact on their bottom line. That’s a trick with limited applicability, after all it won’t work with the EU or the US, but it could be considered worthwhile if there is a perceived risk of South Korea becoming a followed precedent elsewhere. .

The most likely scenarios involve lengthy and protracted court battles over the details of the law, followed by a grudging implementation of the most basic and literal version of new regulations possible from both Apple and Google. How things develop from there could have a big impact on deliberations in other countries; Whether the measure creates security issues and fraud will definitely be a key factor to consider, but it will also be important to see how much impact the change actually has on consumer behavior (how much discount should you offer to overcome consumer confidence and ease use of the payment system integrated into the platform?), as well as in the approach of the platform holders themselves, whose attitude towards their app stores will likely change drastically if they are no longer a major source. from income.

Whatever happens, South Korea’s high-tech consumers will once again be in the spotlight of the world for years to come, and the results of this regulatory experiment are likely to have a huge impact on how industries work. technology, media and games. for decades to come.


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