Compulsory In-app Purchases

 

According to industry sources on July 13, there is growing controversy over Google's and Apple's moves that require their own payment systems to be used in in-app purchases. In-app purchases refer to making additional payments within the app after downloading it. Like Apple, Google's own payment module is the only method for in-app purchases on Google Play, which started on August 2012.

Developers are in a disadvantageous position, since they must pay Google’s 30 percent fees. In contrast, they can pay as little as 10 percent when using other in-app purchase payment services.

As a result, Google's sales are skyrocketing, and developers' profitability is decreasing. According to mobile research company App Annie, sales of Google increased 1.5 times per month from January to August 2012, compared to the same period last year. But after the initiation of its own payment method, its earnings rose nearly five to six times in December of 2012. Sales of Google Play increased by 2.4 times in the first quarter of this year from the previous year.

Local app developers, on the other hand, appear to be suffering from sluggish sales. Due to Google's payment monopoly, they have no choice but to pay three times more expensive fees to Google and Apple, rather than paying 10 percent fees. Kakao's 21 percent toll charge aggravates the problem. To take one example, WeMade Entertainment's earnings fell 44 percent in Q1 2014 from a year ago.

An expert pointed out, “Google's action to force developers to use its own payment method can be applicable to unfair business practices.” Italy's anti-trust regulator already started to investigate the in-app payment system itself on the grounds of unfair business practices.

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