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South Korea passes landmark bill to curb app payment monopolies

The bill effectively prevents companies like Google and Apple from charging commissions on in-app purchases

South Korea passed a bill today that bans big app store operators from forcing software developers to use their platform’s payment systems.

The Telecommunications Business Act, also known as the “Anti-Google law”, passed by 180 in favour out of 188 attending, according to Reuters.

This is the first major bill passed by a major economy against Apple and Google, despite the two companies facing growing global criticism for requiring the use of payment systems that charge commissions of up to 30%.

“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 Google spokesperson told IT Pro.

“The Telecommunications Business Act 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," a spokesperson from Apple told IT Pro. "We believe user trust in App Store purchases will decrease as a result of this legislation — 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.”

The Coalition for App Fairness, of which Epic, who has filed various complaints against Apple in multiple jurisdictions over its app store, is a member, called the new law a “significant development in the global fight to bring fairness to the digital economy”.

“We applaud South Korean lawmakers and President Moon Jae-in for setting an example for the rest of the world to hold app store gatekeepers accountable for their harmful and anti-competitive practices,” it said on Twitter.

"The Coalition for App Fairness hopes US and European lawmakers follow South Korea’s lead and continue their important work to level the playing field for all app developers and users.”

At the end of August, Apple made changes to the way its App Store operates as part of a $100 million settlement with US-based app developers who sued the company for alleged unfair practices. The firm will now allow developers to inform users about in-app payments outside of the App Store through email or other methods, although they are still prohibited from doing so through the app.

Earlier in August, a group of US bipartisan senators introduced a bill to protect competition and strengthen consumer protections within the app market as part of a push to curb the power of big tech through antitrust legislation.

The Open Markets Act was introduced on 11 August, detailing that Google and Apple have “gatekeeper control” of the two dominant mobile operating systems and their app stores allow the companies to exclusively dictate the terms of the app market.

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