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Japan Investigating LINE’s Virtual Currency

April 7, 2016 - Written By Tom Dawson

Whenever analysts take a look at the app market on the two largest platforms, Android and iOS, it mostly comes down to the realization that people are far more likely to download something for free and pay for it later. This is no more so true than of Android apps, where developers will probably see more downloads, but less revenue compared to iOS. Regardless, the “freemium” model of offering something for free upfront and then charging for other items such as in-game currency to purchase other items or upgrade packages and that sort of thing. This virtual currency is what has popular messaging app LINE in hot water in Japan.

LINE is often considered second fiddle to the likes of WhatsApp all over the world, but in major parts of Asia such as South Korea, Japan and elsewhere, LINE is the top dog. Which why it comes as no surprise that the company is under investigation in Japan for their use of virtual currency. Japan regulates this sort of thing more seriously than other countries and ask that not only do companies operating a virtual currency declare it, but also give 50% of this the amount spent on virtual currency to the Justice Ministry to protect users should the company go bust. LINE have said that because they don’t view their coins as a virtual currency, they see no reason to declare it to the Japanese authorities. This has, unsurprisingly, upset the Japanese authorities and the messaging app is now under investigation, with the end result likely to be fines, which we doubt can be paid in virtual coins.

If anything, this is an interesting example of how other countries around the world approach in-app purchases and virtual currencies. Google has, in the past, made an example of refunding in-app purchases purchased in error by children, and some time ago changed the way that in-app purchases are presented and authorized inside of apps and games. Whether or not LINE is found to be guilty of any wrongdoing could have a big effect on how developers and other governments view in-app purchases and virtual currencies in the long term.