Lawmakers have been reviewing an amendment to the Telecommunications Business Act, which would prohibit app store operators from “unfairly using their market position to force a certain form of payment” on companies. Once enacted, violators could receive a fine of up to 3% of their annual sales, in addition to up to 300 million Korean won ($ 257,000) in penalties.
The bill was expected to be put to a vote on Monday, but the parliamentary session was abruptly postponed.
If the law is passed, developers will be able to select the payment systems that will be used to process purchases from the app, meaning they will be able to avoid the heavy charges imposed by the two longtime leaders.
South Korea is not the only country in the region examining the two companies. On Monday, Australian Treasurer Josh Frydenberg called for new regulations on digital payments.
“If we do nothing to reform the framework, it will be Silicon Valley that will determine the future of a critical piece of our economic infrastructure.”
A beer battle
The bill, which is being closely followed internationally in South Korea, could pave the way for similar actions elsewhere. There is numerous research on the application ecosystem already underway worldwide, including in Europe and the UK.
The South Korean proposal has been dubbed the country’s “anti-Google law,” as politicians argue that the Silicon Valley giant has taken advantage of his long-term dominance in the field and unimportant developers.
In July, South Korean lawmaker Jun Hye-sook urged parliament to move the bill forward quickly and called it “a law to prevent Google from dominating.” [its position] above others “and a measure that” would protect IT developers from the platforms that dominate them. “
Both companies have responded, arguing that the law could harm app developers and consumers in the long run.
“While the law has not yet been passed, we are concerned that the hasty process has failed to adequately analyze the negative impact of this legislation on Korean consumers and application developers,” said Wilson White, senior director Google Public Policy. a statement.
“If passed, we will review the final law when it is available and determine how best to provide developers with the tools they need to build successful global businesses while providing a safe and reliable consumer experience.”
Apple said the measure “would put users who buy digital goods from other sources at risk of fraud, undermine their privacy protections, make it difficult to manage their purchases and features such as” Question to buy “and parental controls. they will be less effective. ”The tools refer to the protections the App Store has implemented so parents can better monitor activity on their families’ accounts.
According to Apple, there are more than 482,000 registered app developers in South Korea and they have earned more than 8.55 trillion Korean won ($ 7.3 billion) so far with the iPhone maker.
“We believe that user confidence in App Store purchases will decrease as a result of this proposal, which will result in fewer opportunities for [them]”, he added in a statement.
However, South Korean Communications Commission chairman Han Sang-hyuk argues that new rules are needed as the platforms continue to exert their “influence”.
“These app market operators are gaining controlling power in the market. It becomes necessary to regulate them,” he told lawmakers last week.
Mounting pressure
On Thursday, the company said that “developers can use communications, such as email, to share information about payment methods outside of their iOS app,” as long as users consent to the receipt of those emails and have the right not to participate.
The move gives developers more leeway to collect payments from their customers without having to pay Apple’s commission for in-app purchases. It emerged as part of a proposed settlement in a class action lawsuit filed in 2019.
Apple and Google app store rates have come under increasing scrutiny as lawmakers and regulators have narrowed their dominance over iOS and Android operating systems.
– Yoonjung Seo, Gawon Bae, Rishi Iyengar, Brian Fung and Lauren Lau contributed to this report.