South Korea’s homegrown app marketplace One Store aims to challenge Google and Apple, two US tech giants that enjoy a near-monopoly in the whopping 300 trillion won ($235 billion) app store market globally, with its forthcoming stock market debut in Seoul.
One Store, South Korea’s sole operator of an app store of the same name, is a merged entity of the country’s four app stores that was previously operated separately by SK Telecom, KT, LG Uplus and Naver. Now it is an affiliate of SK Square, SK Group’s investment unit.
In its push for global expansion, it plans to secure a footing first in Southeast Asian countries and Taiwan by the end of this year, and then Europe and North America in the long run.
“Korea is the only app store market in the world which made its way out of an app store monopoly,” One Store CEO Lee Jae-hwan told a news conference in Seoul on May 9.
“To the global market, One Store is close to being among the only options, given the time and cost it takes for a country to create a new app store from scratch.”
Lee cited an estimate by IGAWorks Mobile Index that showed One Store beat Apple with 13.8 per cent of market share in 2021 and trailed just behind Google. The company also estimated the total transactions on its marketplace at 1.13 trillion won through 2021, exceeding the one trillion won per year mark for the first time.
Moreover, One Store will benefit from the world’s efforts to break the app store monopoly and its own localisation efforts.
There are bills pending designed to curtail tech giants’ monopolistic behaviour, such as the Open App Markets Act in the US and the Digital Market Act in the EU. These bills are expected to open up a new opportunity to the Korean marketplace, dedicated to mobile gaming apps, media content like webtoons and gaming gear, Lee said.
Also, One Store charges customers lower commission fees for users compared with Google and Apple at home. The same policy will be applied to the overseas market, according to Lee. Moreover, One Store will support a wider range of payment options including vouchers, bank-to-bank transfers and prepaid cards.
“We are seeing a strong pressure worldwide to open the doors to new app store operators, and we expect the entry barrier to disappear by late this year or early next year,” Lee said.
Part of the cost for its overseas expansion will come from its initial public offering (IPO) later this month, which could fetch up to 277.7 billion won. Immediately after the IPO, its market cap is expected to stand at up to 1.1 trillion won.
This comes despite the unfavourable macroeconomic conditions and investors’ resulting flight to safety that have weighed down on the stock market.
Its sister company SK Shieldus, a cybersecurity service company, withdrew from its bid to offer shares to the public on May 6. The company cited “jittery” market sentiment as its book building drew lacklustre attention from institutional investors, reeling from macroeconomic concerns such as the Ukraine conflict and the US interest rate hike to fight inflation.
Both SK Shieldus and One Store are controlled by SK Square, a carve-out of South Korea’s largest mobile carrier SK Telecom. SK Square’s share price hit an all-time low as it fell 5.3 per cent on May 9.
A One Store official said the company will go on to proceed with the IPO at all costs, considering the low IPO price at nearly the purchase price set in a $15 million equity investment by Deutsche Telekom Capital Partners, a joint investment body by Microsoft and Deutsche Telekom.
“We think it is the right timing to do the IPO. If we don’t we are losing the opportunity to grow our global presence,” One Store chief financial officer Kim Sang-don said.
One Store has never been in the black since it was founded in 2016. The company in 2021 recorded a 5.8 billion won operating loss, up over fivefold in a year. Kim anticipated a turnaround in 2022 with some five billion won operating profit.
THE KOREA HERALD/ASIA NEWS NETWORK