South Korea's National Assembly approved the passage of its "Anti-Google Law" on 31 August, after several delays. The legislation, dubbed after Google but with a broader scope, will bar Alphabet company and Apple from compelling developers to adopt their in-app billing systems when developing apps for their two market-dominating app stores.
The bill will become law after President Moon Jae-in, whose party has been a vocal supporter of it, signs it. This is the first time a government has stepped in to stop Google and Apple from imposing their own payment rails on in-app purchases.
The policies of both the American companies typically require developers to pay the tech behemoths a commission of up to 30 per cent on each transaction. South Korean lawmakers have suggested laws to restrict tech giants from exercising their dominance in the app payment sector. On 25 August, South Korea's preliminary committee voted to move forward with the updated Telecommunication Business Act, which aims to prevent Google and Apple from charging app developers commission on in-app purchases.
According to the latest bill, which was adopted this week, by pushing customers to purchase via alternate channels, developers would be able to avoid paying commission to big app store operators like Google and Apple.
An Apple's spokesperson said that the legislation will "put users who purchase digital goods from other sources at risk of fraud, undermine their privacy protections, make it difficult to manage their purchases and features like 'Ask to Buy' and Parental Controls will become less effective". It was also said that because of the legislation, user trust in App Store purchases would most definitely dwindle.
Meanwhile, according to a Google spokesperson, its service fee "helps keep Android free, giving developers the tools and global platform to access billions of consumers around the world". Additionally, the 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."
A report by Reuters explained that the purpose of this legislation is to prevent app store operators with a dominating position from imposing payment schemes on app creators and "inappropriately" delaying or blocking app reviews. Around 180 of the MPs in attendance voted in support of enacting the change to the Telecommunications Business Act.
According to reports, this newly passed bill grants the South Korean government the authority to mediate disputes in the app market involving payment, cancellations and refunds.
As per the Reuters report, a spokesperson at Match Group, which owns the popular dating app Tinder said in a statement: "Today's [31 August] historic action and bold leadership by South Korean lawmakers mark a monumental step in the fight for a fair app ecosystem. The legislation passed today by the Assembly will put an end to mandatory in-app purchase in South Korea, which will allow innovation, consumer choice, and competition to thrive in this market."
The Korea Internet Corporations Association, a non-profit organisation that represents Korean IT companies, praised parliament's decision against the tech giant and said: "We hope that the passage of this bill will ensure the rights of creators and developers, and create a fair app ecosystem, where users can enjoy diverse contents at lower prices."
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