South Korea has become the first country to pass a law that ends Apple and Google’s power to dictate payment terms on their app marketplaces. This, analysts believe, sets “a potentially radical precedent for their lucrative app store operations everywhere from India to the U.S.”
The amendment to the Telecommunications Business Act, dubbed the “Anti-Google law,” has been passed by South Korea’s National Assembly today. The piece of legislation lobbied by the country’s Democratic Party allows mobile devs to bypass Google and Apple app stores by using independent payment systems. The Act will become law once signed by President Moon Jae-in.
“This could presage similar actions elsewhere,” said Guillermo Escofet, digital consumer platforms analyst, via Bloomberg. “Regulators, lawmakers and litigators in North America and Europe are also scrutinizing app-store billing rules, and the overriding political mood has become hostile to the enormous amount of power concentrated in the hands of the tech giants.”
Both Apple and Google previously voiced concerns over the new law. Apple said via Bloomberg the Act “would expose users to fraud, undermine their privacy and hinder parental controls.” Google also cited the potential “negative impact of this legislation on Korean consumers and app developers.”
Now that the bill has been approved, both companies have made statements. “We’ll reflect on how to comply with this law while maintaining a model that supports a high-quality operating system and app store, and we will share more in the coming weeks,” Google said. Apple sounded more pessimistic: “We believe user trust in App Store purchases will decrease as a result of this proposal — leading to fewer opportunities for the over 482,000 registered developers in Korea who have earned more than KRW8.55 trillion to date with Apple.”
The law also gives the South Korean government the power to require an app market operator to “prevent damage to users and protect the rights and interests of users,” investigate app market operators, and mediate disputes regarding payment, cancellations or refunds in the app market.
“Today’s historic action and bold leadership by South Korean lawmakers mark a monumental step in the fight for a fair app ecosystem. The legislation passed today by the Assembly will put an end to mandatory in-app purchase in South Korea, which will allow innovation, consumer choice, and competition to thrive in this market,” a spokesperson at Tinder owner Match Group said via Reuters.