South Korea weighs law aimed at Google and Apple app payments         

Proposed bill would bar tech giants from requiring software developers to use their payment systems, effectively stopping them from charging commissions on in-app purchases

Both Apple and Google have faced global criticism because they require software developers using their app stores to use proprietary in-app payment systems that charge commissions of up to 30% on in-app purchases. File picture

South Korea is likely to bar Google and Apple from requiring software developers to use their payment systems, effectively stopping them from charging commissions on in-app purchases, the first such curbs on the tech giants by a major economy.

The parliament's legislation and judiciary committee is expected to approve the amendment of the Telecommunications Business Act, dubbed the "Anti-Google law", that takes aim at app store operators with dominant market positions. 

If the bill gets the committee's approval, it will be put to a final vote in the coming days. Lawmakers in South Korea have pushed the issue of the commission structure since mid last year.

Global criticism

Both Apple and Google have faced global criticism because they require software developers using their app stores to use proprietary in-app payment systems that charge commissions of up to 30% on in-app purchases.

"For gaming apps, Google has been forcing app developers to use its own payment system ... and it wants to expand its policy to other apps like music or webtoon," said Kwon Se-hwa, a general manager at the Korea Internet Corporations Association, a nonprofit group representing Korean IT firms.

"If the new bill becomes the law, developers will have options to use other independent payment systems," Kwon said. 

The EU last year proposed the Digital Markets Act, taking aim at app store commissions. 

The rules are designed to affect large companies, but some European MEPs are in favour of tightening them to specifically target American technology giants, Reuters reported in June 

Earlier this month in the US, a bipartisan trio of senators introduced a bill that would rein in app stores of companies they said exert too much market control, including Apple and Google.

In South Korea, the home market of Android phone maker Samsung Electronics, Google Play Store earned revenue of nearly $5.3bn (€4.5bn) in 2019, according to a government report published last year. 

Lower service fee

Earlier this year, Google said it would lower the service fee it charges developers on its app store from 30% to 15% on the first $1m they earn in revenue in a year. Apple has made similar moves.

For Apple too, commissions from in-app purchases are a key part of its $53.8bn services business, and are a major expense for some app developers. In May, a competition lawsuit filed by the maker of the popular game Fortnite against Apple revealed the game maker paid $100m in commissions to Apple over two years. 

Meanwhile, the CEOs of Apple, Microsoft, and Amazon plan to attend a White House meeting with President Joe Biden this week to discuss efforts by private companies to improve cybersecurity following a dramatic uptick in ransomware and online attacks over the past year. 

Apple’s Tim Cook, Microsoft’s Satya Nadella and Amazon’s Andy Jassy plan to attend the event. 

• Bloomberg and Reuters