A new Korean law says Apple and Google must allow other payment options – here’s why that matters
The new law could set a precedent for more similar legislation around the world.
The South Korean government is set to enact a new law that will require both Google and Apple to allow developers to use a third-party payment system. The bill was passed earlier this week, and it is expected to be signed into law by Korea’s president, Moon Jae-in.
According to a report from The Wall Street Journal, South Korea has almost completed the process of establishing this new law. This amendment to the country’s Telecommunications Business Act will prevent the big app markets, like Google and Apple, from requiring developers to use their in-app purchase systems.
Both Google and Apple require third-party apps to use their payment systems for any in-app purchases. As a result, both companies receive a commission of about 30% from every transaction.
READ MORE: Google halts updates for Korean app over third-party payments
Of course, neither company is happy about the new law. A Google representative told The Verge that its commissions help “keep the Android platform free,” and that it helps give developers “access billions of consumers around the world.”
Apple took a slightly different angle of defense, claiming that using third-party payment systems opens users up to more chances for fraud or privacy violations.
Either way, it’s clear that neither of these companies is happy about Korea’s new legislation. Lobbyists are even appealing to the US government, claiming that Korea’s new law will violate a trade agreement by influencing a US company.
What does Korea’s new law mean for these companies in the rest of the world?
The key aspect to this new Korean legislation is that it is not at all a new idea. Both of these companies have been facing pressure recently over the control that each of them has over apps and developers that use their platforms.
Other countries have already passed legislation limiting the power that both Google and Apple have. A new Russian law requires all new smartphones to come with software from Russian developers preinstalled and the Australian government is currently considering new regulations for both Google Pay and Apple Pay.
The platforms requiring developers to use their in-app payment systems have been a topic of major discussion. Some places in the United States have even proposed similar legislation to what Korea is currently working on.
But the biggest pushback on this rule in the US is definitely coming from gaming giant, Epic Games. Epic is currently suing both Apple and Google over their policies, claiming that the companies have leveraged their dominant positions to have too much control over their app stores.
Both of those lawsuits are still ongoing, and it’s unclear what the outcome will be. Either way, the new legislation that will soon be made into law in Korea has the real potential to change the way both Google and Apple operate their app stores in terms of in-app purchases.
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