South Korea has approved legislation that prohibits big platform owners such as Google and Apple from limiting app developers to built-in payment mechanisms.
President Moon Jae-in, whose party championed the measure, is now expected to sign it into law.
The regulation is a setback for Google and Apple, which both require in-app transactions to go via their systems rather than independent payment processors, allowing them to take a 30% cut. If internet businesses do not comply with the new regulation, fines of up to 3% of their South Korean income could be imposed.
The modification to South Korea’s Telecommunications Business Act might have a significant impact on how Google’s Play Store and Apple’s App Store operate globally. The law was enacted by the National Assembly of South Korea on Tuesday.
Google defended its service fees in a statement, claiming that they “help keep Android free” by providing developers with “the tools and global platform to access billions of users across the world.”
According to a Google representative, “just as it costs developers money to build an app, it costs us money to construct and maintain an operating system and app store.” “We’ll think about how to comply with the law while retaining a model that supports a high-quality operating system and app store, and we’ll release additional information in the coming weeks.”
Apple and Google have both made adjustments to their store policies in an attempt to prevent such behavior. Apple announced the App Store Small Business Program, which lowered Apple’s cut from developers earning less than a million dollars a year on the store in half. It also agreed to allow developers to send emails to their users informing them of payment choices outside of the App Store, using the email addresses they provided. Instead of taking 30% of a developer’s first million dollars, Google announced it would only take 15%.
According to reports, lobbyists for the two corporations have claimed to American officials that the Korean legislation violates a trade agreement by attempting to restrict the behavior of US-based businesses.