South Korean lawmakers passed a law on Tuesday barring Apple and Google from forcing app developers to use the tech giant’s payment system by making their lucrative monopolies on the App Store and Play Store illegal.
South Korea is said to be the first country in the world to pass such a law, which takes effect when it is signed by a president whose party supports the law.
The tech giant has faced widespread criticism for requiring app developers to use an in-app purchase system that can earn businesses up to 30% commission. Commissions are designed to help pay for app market maintenance costs.
The law prohibits app market operators from using their monopoly to need such payment systems, meaning that they need to allow alternative payment methods. South Korea bans Google and Apple is to encourage fairer competition.
The bill aims to prevent retaliation against developers by prohibiting companies from imposing undue delays in approving apps.
Apple Statement after South Korea Ban
Apple criticized the law in a statement on Tuesday, saying it would “expose consumers who buy digital goods from other sources to fraud, undermine their privacy, make it harder to manage their purchases,” and make parental controls and other features a must. less effective.
“We believe that this law will reduce consumer confidence in app store purchases,” and result in fewer opportunities for Korean app developers, the company said.
Regulators in Europe, China and a number of other other markets are concerned about the dominance of Apple, Google and other industry leaders in payments, online advertising and other areas. Chinese regulators have fined some companies over antitrust laws while other governments have struggled to keep the market competitive.
“Google Play is more than just payment processing, and our service fees help keep Android free by providing developers with tools and a global platform to access billions of users around the world,” he explains.
Last year, both Google and Apple cut their in-app commissions for developers with less than $1 million in annual sales from 30% to 15%, which covers the majority of apps in their respective stores. But the lower commissions don’t help the biggest app makers like Epic and Spotify, which have received their complaints around the world.
Dozens of US states filed lawsuits against the Google Store in July. Australian regulators, meanwhile, have also raised concerns about restrictions on in-app purchases, meaning developers “have no choice but to use Apple and Google’s own payment systems,” according to an early dominance report released in April.