South Korea has become the first country to pass a bill that will end Apple and Google’s control over payments on their app stores. The South Korean National Assembly (parliament) has passed a bill that will force Google and Apple to open their app stores to alternate payment options in South Korea. This threatens to end the tech giants’ dominance over how developers on their stores sell digital goods within their apps. The bill is the first of its kind in the world and ammends South Korea’s Telecommunications Business Act to prevent large app market operators from requiring the use of their in-app purchasing systems.
If Apple and Google fail to comply with this rule, they will be fined 3 percent of their total revenue in South Korea by the South Korean Communications Commission – the country’s media regulator. This comes as a welcome move from the country’s lawmakers as there is a growing global scrutiny against Google and Apple over their “unfair” commissions on in-app purchases made on any app downloaded from the App Store or the Google Play Store. Both tech giants charge developers up to a 30 percent commission when users make in-app purchases within apps that are downloaded via the Google Play Store or the Apple App Store.
Developers across the world have raised concerns about the in-app payment system, opposing the high commissions. Developers have demanded that they should be able to freely use other systems.
The new bill passed in South Korea is expected to give developers a choice to use any payment method they please for in-app purchases. The legislation in South Korea is a result of Google’s announcement last year that it will enforce the billing system on all developers on the Play Store starting October this year.
A similar bill has been introduced in the US that seeks to limit the control Apple and Google have over apps on their app markets. Both tech giants are currently locked in a legal dispute against Fortnite make Epic Games over the same issue, after Google and Apple booted Fortnite from their respective stores due to Epic giving users an alternative payment option. Further, in July, about 36 US states filed a lawsuit against Google, alleging anti-competitive behaviour in Play Store operations to collect and maintain commission.
The bill’s passage also comes after multiple attempts from Apple and Google to appease developers, a report in South Korean agency Yonhap said. Last week, Apple reached a class action settlement in the US with developers who have accused it of exerting dominance in app content distribution. Under the settlement, Apple said it would allow developers to share information about payment methods outside of apps with its users – a move the iPhone maker had previously limited.
Amid the outrage, Apple has also cut its 30 percent commission by half for app developers that earn up to $1 million annually at the start of this year. Google has made similar measures, lowering its commission to 15 percent for the first $1 million of revenue earned by developers from July.