Apple App Store and Google Play Store will have to allow app developers to use external or third-party payment systems. These payment platforms will essentially avoid the Apple Tax and Google Commission, at least in South Korea.
South Korea’s National Assembly has reportedly passed a historic bill that would loosen the iron grip Apple and Google have over their respective App Stores. Needless to mention, the newly amended South Korea’s Telecommunications Business Act could severely dent the tech giants’ highly lucrative and dependable earnings from commissions that go as high as 30 percent per sale.
South Korean parliament approves bill that essentially bans Google and Apple from forcing developers to use their payment systems:
South Korea’s parliament has approved a bill that imposes curbs on Google and Apple’s payment policies. The most notorious being the compulsion to use the tech giants’ proprietary billing systems.
Needless to mention, South Korea will be the first country to pass a country-wide law that basically pushes back Google’s and Apple’s ironclad control over their own app stores.
In a blow to both Apple and Google, South Korea has today passed a law requiring major app stores to allow alternative payment methods. The Wall Street Journal reports that the bill, due to be rubber-stamped by president Moon Jae-in,… https://t.co/Ob0njx6DlX via @GetNewsUpdates pic.twitter.com/WvdGPJWqqL
— NEWS UPDATE (@GetNewsUpdates) August 31, 2021
The South Korean Parliament, called National Assembly, has already passed the bill. The bill now awaits the seal of South Korean President Moon Jae-in to become a law.
— Diana J. Wilson (@bcsn_official) August 31, 2021
Essentially, South Korea has amended the country’s Telecommunications Business Act. Moving ahead, the amendment seeks to stop app store owners from requiring developers to use in-house payment systems.
The newly amended law also seeks to ban app store owners from unreasonably delaying the approval of apps or deleting them from the marketplace. These would obviously be methods of retaliation to pieces of legislature that’s cannot be overturned.
If a company violates the law it could be fined up to 3 percent of its South Korean revenue by the Korea Communications Commission.
Will the new South Korean law adversely affect Apple and Google?
There’s no doubt that Apple and Google earn handsomely from the digital sales of apps and services from their respective App Stores. Neither of the companies offers exact figures pertaining to revenues from app store sales.
However, some reports estimate consumers around the world spend approximately $100 Billion annually on apps and services. Both Apple and Google charge a maximum of 30 percent commission on each sale that takes place within the app store.
— Angsuman Chakraborty (@angsuman) August 31, 2021
Incidentally, both the companies do offer incentive programs for developers. However, the companies withdraw the program as soon as developers start making more than a million dollars.
South Korea is certainly a big market for Apple and Google. This country might have a small population, but the consumers have access to next-gen telecommunication technologies.
FWIW, mobile phones are consumer devices & South Korea's tariff on these American products would violate free trade agreements (https://t.co/fHxNaA03Er).
"Apple and Google must allow developers to use other payment systems, new Korean law declares" https://t.co/OpirAWSjEc
— ℨ𝔞𝔠𝔥 𝔈𝔡𝔴𝔞𝔯𝔡𝔰 (@thezedwards) August 31, 2021
What must bother Apple and Google the most is that South Korea might set a precedent. Apple Inc. recently compromised and allowed developers to inform about external payment systems.
However, this South Korean law might just help legislators around the world. Many countries might force Apple and Google to allow external payment systems into their App Stores.