South Korea demands Apple and Google open app stores to 3rd-party payments

A bill voted through by Korea’s parliamentarians demands application store operators like Apple and Google allow customers to choose alternative payment methods when buying apps and content.

Dubbed “Google power-abuse-prevention law” in Korea, the bill was passed by the parliamentary committee on Tuesday and is now waiting to be signed into law by the president. The bill, which technically is an amendment to Korea’s Telecommunications Business Act, seeks to stop app store operators, primarily Apple and Google, demanding customers to only use their own payment methods, for example Apple Pay and Google Pay when shopping inside the app stores. Failing to comply could mean a fine of up to 3% of the company’s total revenue in Korea, enforceable by the Korea Communications Commission, the country’s telecom and media regulator.

Governments taking on big tech companies isn’t a phenomenon unique to Korea, apparently, but the home to Samsung is the first liberal democracy that has gone through the legislation process to rein in the dominant tech companies’ power to monopolize the digital market.

This piece of legislation has both narrow and broad ramifications. In the narrow and immediate sense, if Apple and Google lose their control over how payment is made inside the app stores, they can potentially lose their grip on the commission they charge developers, something Epic attempted to do, only to see its titles pulled by Apple. Apple takes 15% of the total customer payment for itself in every app and content transaction, which rises to 30% when the app developers make more than $1 million from the app store. Google charges 15% on the developer’s first $1 million earning from Google Play Store and 30% after that.

The broader implication is that Korea has set a precedent for other jurisdictions that also aim to break the big tech companies’ tight grip on the digital ecosystems. The European Union has been investigating Apple’s allegedly monopolistic behaviour against developers like Spotify and Epic. Early in July, 36 US states and Washington DC have sued Google for monopolistic behaviour operating the Play Store.

Given the significant implications of this piece of legislation, no wonder Google isn’t happy. Its spokesperson toldThe Wall Street Journal that “the rushed process hasn’t allowed for enough analysis of the negative impact of this legislation on Korean consumers and app developers.” Earlier when the bill was entering the final reading at the National Assembly, Korea’s parliament, Apple expressed its concern that customers using other payment method could face increased risk of fraud and privacy violation.

Taking tech giants to task is not restricted to payment methods either. A Senate bill in the US has been sponsored by senators from both parties and aims to not only require Apple and Google to open their app stores to third party payment methods, but also allow side-loading apps, as well as opening up to third-party app stores on their devices, in addition to other demands.

China, which moves much faster to crack down on internet giants than the time it would take western democracies to legislate, has just issued a rule to limit videogame time for all under-18s to one hour per day on Fridays, weekends, and public holidays, between 8pm and 9pm, and ban videogaming on all other days. It is not made clear how the rule will be implemented, but in response to earlier crackdowns, Tencent, the world’s biggest videogame publisher, has used remote logoff to force users to stop playing when time limit is up, and has used facial recognition to prevent sons from sharing accounts with fathers. Privacy violation consideration is secondary to compare with the mandatory compliance with government demands.