70% of Japan smartphone games bypass in-app payment to avoid US tech giants

Summary

TOKYO - Nearly 70 percent of popular Japanese smartphone games have introduced external payment systems for items and services to avoid hefty commission fees from U.S. tech giants Google LLC and Apple Inc., a Kyodo News tally showed. The move comes ahead of a new Japanese law tightening regulations on Google and Apple, which dominate smartphone platforms, set to take full effect in December. The legislation requires the two companies to open their payment systems. Almost all users currently download games through Apple and Google's app stores. When players buy in-game items, software providers pay the tech giants commissions of up to 30 percent. A Kyodo News survey found that among the top 30 best-selling game titles in 2024, at least 11 of the 16 offered by domestic companies have introduced payments through external websites. Although the two tech giants say the fees are necessary to protect user privacy and security, the costs have weighed on game makers. For outside transactions, users make payments through channels other than apps, such as game websites. Settlement service providers like Digital Garage Inc. and GMO Tech Inc. typically charge a 5 percent commission, far below Apple's and Google's rates. Payments through external websites in the in-app purchase market, estimated at over 1 trillion yen ($6.8 billion), are expected to bring user discounts and boost providers' profitability, analysts said. In the survey, Kyodo News received responses from eight of 12 domestic game makers, while two declined to comment and two did not respond. Of the 12 titles from the eight firms, 11 have adopted external settlements. In August last year, Mixi Inc. introduced an outside settlement system for its blockbuster game "Monster Strike," allowing its users to purchase about 5 percent more items compared with in-app payments.