EARLY EVIDENCE ON THE EFFECTS OF OPEN MOBILE IN-APP PAYMENT SYSTEMS FROM SOUTH KOREA

ABSTRACT Mobile app platforms are highly concentrated—Apple and Google each distribute over 75% of the total number of apps installed on the relevant devices. These platforms generally require developers to use a built-in system for processing payments with a commission rate of 30% for both the initial purchase of an app and any subsequent in-app purchases. In September 2021, South Korea became the first country to ban this lock-in; purchases made in the country may be conducted through any billing system developers wish. We analyze the short-term impact of this policy change (and Apple’s subsequent adaptation) on demand for apps and revenue using difference-in-differences techniques and data on apps offered through Apple’s App Store from a leading app analytics firm from January 2021 to December 2022. We find no evidence that the policy change generated substantive changes in South Korea’s app marketplace.