South Korea turns regulation heat on Google and Apple app store payments

South Korea, through plenary vote of the National Assembly, has prompted Google and Apple to accept alternative payment in the app store. Once signed by President Moon Jae-in, the bill will block the two companies from exclusively using their own in-app payment systems. It will also ban them from unreasonably delaying or deleting apps.

Over the years, criticism has been mounting about how much “power” Apple and Google app stores wield over developers have resulted in lawsuits and lawmakers trying to give app creators more power. Lawmakers and regulators have zeroed in on their dominance over the iOS and Android operating systems. According to CNN Business, Apple’s commissions go as high as 30% on some purchases made through the company’s platform, with developers saying they have little choice but to comply, since Apple does not allow customers to download apps from any source other than the company’s official store.

Through the new South Korean legislation, developers will be able to select which payment systems to use to process in-app purchases, meaning they may be able to bypass hefty charges imposed by Google and Apple. The new law comes after lobbying from Apple, Google and other tech groups. Appleinsider stated that Apple maintained the provisions of the Telecommunications Business Act would mean the app store could no longer stay the trusted place for downloading apps. “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,” Apple said in a statement.

The iPhone maker raised concerns that the move would put users who purchase digital goods from other sources at risk of fraud, undermine privacy protections, make it difficult to manage their purchases, and features like “Ask to Buy” and Parental Controls will become less effective.

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Wilson White, Google’s Senior Director of Public Policy, in a statement said while the law has not yet been passed, the company is worried that the rushed process hasn’t allowed for enough analysis of the negative impact of this legislation on Korean consumers and app developers. “If passed, we will review the final law when available and determine how best to continue providing developers with the tools they need to build successful global businesses, while delivering a safe and trustworthy experience for consumers.”

According to the most recent government study, as per CNN Business, Google and Apple made about $5.2 billion and almost $2 billion, respectively, in each of their app stores in South Korea in 2019. Over the past couple of months, Apple’s commissions have been at the center of several legal disputes, with the most highlighted one being Epic Games Fortnite.