South Korea Bans App Store Payment Monopolies In Latest Blow To Google, Apple
South Korea Bans App Store Payment Monopolies In Latest Blow To Google, Apple
BY TYLER DURDEN TUESDAY, AUG 31, 2021 - 12:00 PM
South Korea just made history in the global battle to combat the
monopolistic tendencies of American tech giants by becoming the first country
to force Google and Apple to allow other payments processors into their app
stores.
According to Bloomberg,
the new law "sets a potentially radical precedent for their
lucrative operations everywhere from India to the US."
Lawmakers in South Korea's National Assembly passed amendments
to the country's Telecommunications Business Act on Tuesday requiring app-store
owners like Google and Apple to give developers a free choice of payment
providers, opening the door for developers like Epic Games to collect payments
directly from customers.
The right to collect in-app payments is at the root of legal
battles in the US and in other jurisdictions. The most notable example is
perhaps the Epic Games vs. Apple legal battle that captivated the Silicon
Valley press corp a few months back. We're still waiting for the judge in that
case to issue a ruling.
Whatever the American judge decides, the new law in South Korea
will likely eat into Apple's and Google's profits for the Asian nation, which
admittedly makes up a tiny sliver of their overall earnings. The bill will
become a law when it's signed by South Korea President Moon Jae-in, whose party
supported the legislation.
Korean lawmakers made their move ahead of plans by Google to
introduce its 30% commission fee in October, reversing a years-long exemption
for South Korea. The company's announcement last year that it would make its
payment system mandatory for non-gaming apps was widely seen as the trigger for
the new legislation, which has been dubbed the "anti-Google law" by
the South Korean law.
But the new law could be a harbinger of similar restrictions in
parts of the world, as the EU, the US and China all look to rein in powers of
their biggest tech companies.
The EU and China have also sought to rein in the power of tech
giants (American tech giants, for Europe, and domestic giants, for China).
China has accomplished this via a series of unilateral crackdowns and
regulatory changes, while the EU's anti-trust chief Margrethe Vestager has
brought a series of lawsuits and fines.
The Korea Internet Corporations Association, an industry lobby group that includes South Korea’s largest internet companies including search and online shopping giant Naver, praised the passage of the bill, which it said would help promote healthier competition.
"We hope that the passing of the bill will ensure that the
rights of (app) creators and developers are protected and create a fair
ecosystem in apps where users will be provided a wider variety of content at
cheaper prices," it said in a statement.
Meanwhile, Apple continued to insist that the new
payment rules will erode safety protections for users, leading
to a decline in trust in App Store purchases, and ultimately, fewer earning
opportunities for developers in Korea.
"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,” an Apple
spokesperson said.
Finally, Bloomberg explains that the new law will have
far-reaching effects. The ramifications extend beyond just the $142 billion
world of apps. The confrontation strikes at the fundamental role played not
only by Apple and Google but also Amazon.com and Facebook as the new
gatekeepers of the digital economy. Over a decade, all four companies have
built up vast online marketplaces on which their rivals do business.
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