According to The Wall Street Journal, South Korea has approved a regulation that prohibits big platform owners such as Google and Apple from confining app developers to built-in payment methods. President Moon Jae-in, whose party championed the measure, is now likely to sign it into law.
The rule is a setback for Google and Apple, which both require in-app transactions to go via their systems rather than independent payment processors, allowing them to take a 30% share. If IT businesses do not comply with the new rule, penalties of up to 3% of their South Korean sales might be imposed.
The change to South Korea’s Telecommunications Business Act might have a significant influence on how Google’s Play Store and Apple’s App Store operate internationally. The measure was enacted by the National Assembly of South Korea on Tuesday.
It makes neither company pleased. Google defended its service fees in a statement, claiming that they “help keep Android free” by providing developers with “the tools and global platform to access billions of customers across the world.”
“Just as it costs developers money to build an app, it costs us money to build and maintain an operating system and app store,” a Google spokesperson said. “We’ll reflect on how to comply with this law while maintaining a model that supports a high-quality operating system and app store, and we will share more in the coming weeks.”
An Apple spokesman did not immediately reply to The Verge’s request for comment. However, the firm issued the following statement prior to the law’s passage.
According to reports, lobbyists for the two firms have claimed to American officials that the Korean law breaches a trade agreement by attempting to regulate the conduct of US-based businesses.
South Korea isn’t the only country seeking to persuade tech titans in the United States. Russia requires that Russian-developed apps be pre-installed on smartphones, while Australia is contemplating regulating Google Pay and Apple Pay.
Some members of the US government have even suggested legislation that is similar to what South Korea has enacted. South Korea’s new law, according to the Wall Street Journal, may be used as a model by authorities throughout the world.
Apple and Google have both made modifications to their store policies in an attempt to deter similar activities. Apple launched the App Store Small Business Program, which reduced Apple’s take from developers making less than a million dollars a year on the platform.
It also agreed to enable developers to use the email addresses they gave to send emails to their users alerting them of payment options outside of the App Store. Instead of collecting 30% of a developer’s first million dollars, Google said it would take only 15%. Despite the improvements, both Apple and Google have faced legal challenges, with Epic Games being the most famous. Epic claimed that Apple and Google took advantage of their dominating positions to limit what users could and could not do with their phones.
While Epic’s case against each business differs, they all have the same basic complaint: Apple and Google’s monopoly on app marketplaces. Both instances are still being investigated.