Google on Thursday outlined a plan to reduce its app store fees and allow users to pay through third-party payment providers in a concession to South Korean regulators.
In the past, Google took a commission as high as 30% of in-app purchase revenue and app sales from developers. It will soon reduce that top fee by a few percentage points down to 26%, while some other media services such as e-books will be charged a fee of 6%.
South Korea's legal framework to regulate app store fees, which passed in August, has been heralded as a potential model for regulators worldwide. The law mandated that Apple and Google allow users to select third-party payment providers instead of their own. It also bars "unreasonable fees" that would steer consumers to first-party payment options.
The idea behind the South Korean legislation is that competition will inevitably drive down fees charged by Apple and Google. However, Google's 26% fee is still rather high and suggests the company doesn't foresee consumers flocking to third-party payment systems so long as developers aren't able to offer drastically more competitive prices.
Apple has told the South Korean government it already complies with the law, setting up a showdown between the iPhone maker and regulators, Reuters reported last month.
In 2020, Google's Play Store generated an estimated $11.6 billion in fees, while Apple generated $21.7 billion from its App Store, according to Sensor Tower estimates cited by Bloomberg.
Climate TRACE's data show emissions at the facility-level.Image: Climate TRACE