Coinbase CEO discusses Apple tax: "Bad policy hurting consumers, will face another blow if not changed"

In late August, South Korea passed legislation to ban Apple and Google from forcing developers to use their in-app payment systems, commonly known as the 30% Apple tax. A similar bill in the United States may also take effect on December 9th. Coinbase CEO commented, "This is a terrible policy that harms consumers."

South Korea Takes the Lead

The South Korean National Assembly passed an amendment to the Telecommunications Business Act on 8/31 for the first time, prohibiting Apple and Google from forcing developers to use their in-app payment systems. The legislation is expected to be signed into formal law by President Moon Jae-in.

If Apple and Google violate the regulations, they may face fines of up to 3% of their South Korean revenue. A Google spokesperson told the Wall Street Journal stated:

Just as developers incur costs to create apps, we also spend money to build, maintain operating systems, and stores. We are considering how to comply with the law while maintaining the same quality of service.

Apple released a statement:

This will make it possible for users to purchase goods through other channels and face fraud and privacy risks. Features such as Ask to Buy and parental controls will no longer be as effective, leading to a decrease in user trust in the App Store, resulting in fewer developers.

Apple Loses Lawsuit

U.S. District Judge Yvonne Gonzalez Rogers ruled in the lawsuit between Fortnite developer Epic Games and Apple on 9/10 that developers no longer need to use the App Store's in-app payment system, and Apple cannot block third-party payments.

If Apple does not appeal and there are no unexpected events, the regulation will take effect on 12/9. This case seems like a victory for game developers against the tech giant monopoly. Apple stands to lose nearly billions in revenue, 70% of total App Store revenue, and its stock price has dropped by over 5% in recent days. However, Epic also breached the contract unilaterally and was refused by Apple to reinstate Fortnite.

Coinbase CEO Brian Armstrong expressed on Twitter stated:

Apple's 30% cut in payment mechanisms is harmful to consumers, a pretty bad policy. I'm glad they finally feel the pressure to change their policy. Many long-term iPhone users are not aware that Android is much better in this regard.

He pointed out that if Apple has the courage, they should be able to detect these warning signs and make changes, rather than being forced to give up years later by the court. Apple will experience short-term revenue losses due to this incident, but will still face a major blow in the long run.

Previously, Armstrong criticized Apple's policy against cryptocurrency when his product "Coinbase Earn" was rejected from being listed, and believed that Apple's policy on cryptocurrency was hindering progress in the world.