How Much Apple & Google Stand to Lose in Korea
This is a single insight from This Week in Apps #77 - That's Not Going to Happen!. Check out the full article for more insights.
In what I want to say is one of the biggest moves made in the app industry as of late, the government of Korea will require app stores to allow developers to use 3rd party payment providers in their apps and games, completely bypassing the native payment mechanisms.
There are a few implications here, from developer revenue to user experience. But... will it actually happen? Let's take a look at what Apple and Google stand to lose if they no longer collect fees from app and game purchases in Korea.
If you're thinking, "how many developers will actually switch?" I'm pretty sure the answer is much closer to everyone than it is to no one. Why? Because if you consider what processing cards cost on the web these days (under 5% per transaction) and compare to the small business tier (15%), the savings are huge.
Let's look at the numbers — So far in 2021, our App Intelligence shows that consumers spent $1.5B on the top 100 apps and games (by revenue) across both stores. All of those developers make more than $1M/yr, so they give Apple and Google 30%, which adds up to about $463M in fees.
That means Apple and Google have at least a half billion-dollars to fight this law. And since that sum is only from the top 100 apps and games, the war chest is likely larger. And that's if they have to break even. They don't, so I expect a very fierce fight to unfold in the coming months.
Fun fact - The law handles stores that continue to operate without allowing 3rd party processors by fining them 3% of their revenue in the country. On that $1.5B, that fine would be just $45M. Muuuch less than what they make in revenue. So I don't see Apple or Google budging. Not for a while.
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All figures included in this report are estimated. Unless specified otherwise, estimated revenue is always net, meaning it's the amount the developer earned after Apple and Google took their fee.
