The new South Korean law could ultimately lead to the first open competition in payment systems.
For the first time ever, a South Korean law is poised to challenge Apple and Google’s monopoly on app store payments, threatening the hefty 30 percent cut they collect through their systems.
According to the Wall Street Journal, a bill expected to be signed into law by South Korean President Moon Jae-in, whose party has long backed the legislation, would prevent Apple and Google from mandating apps use their proprietary in-app purchasing systems, and similarly prevent them from defaming app developers “unreasonably delaying app approvals or removing them from stores; provisions meant to stop retaliation against developers.”
Korea Communications Commission, the country’s media regulator, has threatened companies with forfeiting up to 3% of their South Korea revenue if they fail to comply with the law.
Apple and Google, both of which have long prohibited apps from using outside payment methods in favor of allowing transactions to flow only through their systems, face a major challenge from this law. Both Google and Apple battled the proposed law as it was pending through South Korea’s legislature while also pressing trade officials in Washington to fight the bill. The bill’s imminent passage marks the culmination of a long-running battle in Seoul.
Google defended its fees to The Verge in a statement, saying the surcharge allowed them to “keep Android free”, and that the platform “provided developers access to billions of potential clients around the world”.
The Google spokesperson said: “Much like developers pay to build apps, we also pay to build and maintain an operating system and app store.”. “In the coming weeks, we will share more about how we will meet the requirements of this law and maintain an operating system and app store of high quality”.
Gizmodo reached out to Google and Apple to inquire about the pending legislation, but neither responded immediately.
While Apple and Google’s gatekeeping practices have been scrutinized by other countries, including the United States, news of the new bill’s passage comes as similar legislation has been pending in other countries. Apple agreed to comply with a Russian law in March that requires users to preinstall some apps the first time they use an Apple device, and Australia announced recently that it would consider new laws regarding how digital payment services are handled by large companies. Recent U.S. lawmakers filed a lawsuit against Google’s app store for illegal monopolization, and introduced bipartisan legislation for regulating the app store. A committee of the Senate that would determine the reasonable rules for app store developers in the Google and Apple platforms.