The days of unchecked expansion of giants such as Google and Apple in international markets are seemingly over. Recent times have increased regulatory scrutiny on the major app store operators – their principles and policies and the fees they charge. South Korea has taken this one step further as the Asian country became the first to ban Apple and Google from forcing developers to use only their payment systems.
Now, developers can charge commissions on in-app purchases and direct consumers to pay via alternate platforms, something that they were powerless to do prior to the “Anti-Google law.” Google and Apple are also prohibited from “inappropriately” delaying the review of, or deleting, mobile content from app markets.
This is something Apple has already done a few days ago, but it seems to have come too late as the bill could not be halted.
Google and Apple have endured their fair share of criticisms regarding their App Stores, which charge exorbitant commissions and bind developers to use their payment systems only. The “Anti-Google law” is an amendment made to the existing Telecommunications Business Act and the final vote was 180 in favor out of 188. Once the legislation has been signed by the President, it will become law.
Under the amendment, the South Korean government can set up an app market operator in order to mediate disputes regarding payment, refunds, and cancellations in the app market, as well as prevent damage to users and protect the rights and interests of users, and probe app market operators, like Google and Apple.
“It’s time the U.S. follow suit to reduce Big Tech’s app store influence. I urge Congress to swiftly pass my bill with Senators Blumenthal and Klobuchar that will help ensure fair competition for innovative startups,” said Senator Marsha Blackburn in a statement.
“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,” said the Korea Internet Corporations Association, a nonprofit group representing Korean IT firms.
“Today’s 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 purchases in South Korea, which will allow innovation, consumer choice, and competition to thrive in this market,” a spokesperson at Match Group, which owns Tinder, said in a statement.
Apple and Google are admittedly not happy with their decision as their influence over developers in South Korea will significantly decrease. Apple felt that the bill would the 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 added that this would result in a decrease of user trust in App Store purchases, “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.”
If other countries follow South Korea’s example, it will prove detrimental to Google and Apple, which have earned huge amounts of revenue from their restricting app store policies. Google will “reflect on how to comply with this law” while simultaneously maintaining a model that supported a high-quality operating system and app store.