Epic Games CEO Tim Sweeney posted on X on December 18, criticizing changes Apple has locally introduced to the Japanese App Store in response to the country’s new smartphone law. He condemned the changes as “a travesty of obstruction and lawbreaking in gross disrespect to the government and people of Japan” and announced that Fortnite will not be returning to the Japanese iOS store this year. Likewise, local developers in Japan are not impressed with the changes either.
Formally called the Mobile Software Competition Act (MSCA), the new Japanese law in question is meant to regulate the market dominance of major mobile OS and app store providers like Apple and Google, and help prevent monopolistic practices. For example, the providers will be required to open their OSs to third-party app stores. This is especially impactful for mobile game developers (and players) in Japan, given that Apple and Google charges 30% commission on in-app purchases made through the App Store and Play Store respectively.
However, Apple has in response argued that MSCA’s requirements for alternative app stores and payment channels “open new avenues for malware, fraud and scams, and privacy and security risks,” and has thus implemented several local changes. This include new fees, such as a 21% commission when developers use third-party in-app payments, and a 15% commission on transactions made via a website linked to by the developer. Sweeney refers to these as “junk fees.”
He also criticized Apple’s requirement that developers distributing apps or services outside the App Store must submit monthly reports detailing all transactions to Apple via a dedicated API, suggesting that this amounts to Apple surveilling every transaction at competing stores.
Many Japanese developers were optimistic that MSCA coming into action would help relieve the financial burden of paying high fees to Apple and Google. This would also be beneficial for players, potentially lowering the prices of microtransaction. However, Apple’s response to the new law seems to have complicated things in a brand-new way, diminishing the benefits of breaking away from the app store.
Japanese game producer Ukyo shared the following view on the new changes:
“After discussing things on the team, we’ve concluded that for small-to-medium-sized businesses, there’s ultimately little benefit to breaking away from app stores. Our concerns are that customer support costs, initial development costs, and maintenance/operational expenses are likely to increase compared to current levels. Also, since using external payment processors means paying transaction fees there too, you end up paying a 5% core technology fee plus several percent in external payment fees. We were like, is there really any advantage? It also simply seems like something that would increase the burden on players.”
Given these circumstances, Ukyo considers it might be wise to wait for relevant laws to be refined and loopholes to be patched up in the country through court precedents and crackdowns by the Japan Fair Trade Commission.
