South Korea lawmakers are planning to bar tech giants Apple and Google from requiring developers to use the payment systems.
Dubbed the “Anti-Google” law, the amendment of the Telecommunications Business Act when passed will enable software developers to use other payment systems. This will effectively stop Apple and Google from charging commissions on in-app purchases which is the main aim of the bill.
Kwon Senhwa, general manager of Korea Internet Corporations, a non-profit representing Korean IT firms, approved of the bill saying “For gaming apps, Google has been forcing app developers to use its own payment system … and it wants to expand its policy to other apps like music or webtoon. If the new bill becomes the law, developers will have options to use other independent payment systems”
Apple, on the other hand, criticized the bill in a statement saying it would ‘put users who purchase digital goods from other sources at risk of fraud, undermine their privacy protections, make it difficult to manage their purchases.”
The world’s third-largest smartphone maker believes that “user trust in App Store purchases will decrease as a result of this proposal — leading to fewer opportunities for the over 482,000 registered developers in Korea who have earned more than KRW8.55 trillion to date with Apple.”
Google hasn’t yet commented on the bill.
The draft legislature may however have further implications aside from denying the tech giants their commissions. Google and Apple are foreign companies in South Korea and any move that hurts them may have negative consequences as far as trade deals between the two countries are concerned. One must also remember that South Korea is home to the largest smartphone company in the world, Samsung, making them direct competitors to both Apple and Google.
Naomi Wilson, vice president of policy for Asia at the Information Technology Industry Council, a group that includes both tech giants, highlighted this fact saying that the legislation would violate ‘South Korea’s multilateral and bilateral trade commitments.’
“If enacted, the bill would present challenges both for app developers and app stores seeking to do business in the Korean market.”
She further urged South Korean lawmakers to re-examine the bill to ensure that it does not disproportionately affect U.S. companies.
U.S. Trade Representative’s office spokesman said that they were still trying to figure out how to balance the needs of these tech companies and President Biden’s directive to increase competition in the industry.
“We are engaging a range of stakeholders to gather facts as legislation is considered in Korea, recognizing the need to distinguish between discrimination against American companies and promoting competition,” Hodge added.
This bill follows a suite of critiques from various governments and NGOs over the requirement that developers only use the in-app payment which charges a hefty 30% commission on all in-app purchases.
The European Union, for instance, proposed the Digital Markets Act last year. This was also meant to address app store commission. However, while most of the rules were meant for large companies some European legislators considered modifying the bill to specifically target American tech giants.
Even at home, Apple and Google are facing opposition in the form of a bill that is similarly meant to rein in the control these tech companies have over the market.
Earlier this year, popular game maker Fortnite, filed a lawsuit against Apple over the $100 million in commissions the company had paid Apple over two years.
These criticisms have however not gone completely unheard by the tech giants. Earlier this year Google announced that it would lower charges on in-app payments from 30% to 15% on the first $1 million a developer earns. Apple followed suit with similar changes.