South Korea's Parliament passes Bill to curb Google, Apple commission dominance

The move by Seoul is the first such curb by a major economy on the likes of Apple and Alphabet's Google. PHOTO: REUTERS

SEOUL (REUTERS) - South Korea's Parliament on Tuesday (Aug 31) approved a Bill that bans major app store operators such as Google and Apple from forcing software developers to use their payment systems, effectively stopping them from charging commissions on in-app purchases.

It is the first such curb by a major economy on the likes of Apple Inc and Alphabet's Google, which face global criticism for requiring the use of proprietary payment systems that charge commissions of up to 30 per cent.

The final vote was 180 in favour out of 188 attending to pass the amendment to the Telecommunications Business Act, dubbed the "Anti-Google law".

"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," a Google spokesman said in a statement to Reuters.

Google added that Google Play provides far more than payment processing, and its service fee helps keep Android free, giving developers the tools and global platform to access billions of consumers around the world.

"It's a model that keeps device costs low for consumers and enables both platforms and developers to succeed financially. And just as it costs developers money to build an app, it costs us money to build and maintain an operating system and app store," said the tech giant.

Apple responded to an e-mail, reiterating a statement issued last week.

"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 8.55 trillion South Korean won (S$9.9 billion) to date with Apple," it said in a statement.

Based on South Korean Parliament records, the amendment bans app store operators with dominant market positions from forcing payment systems on content providers and "inappropriately" delaying the review of, or deleting, mobile content from app markets.

It also allows the South Korean government to require an app market operator to "prevent damage to users and protect the rights and interests of users", probe 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 spokesman for Match Group, which owns popular dating app Tinder, said in a statement.

The Korea Internet Corporations Association, a non-profit group representing South Korean information technology firms, also welcomed the Parliament's decision.

"We hope that the passage of this Bill will ensure the rights of creators and developers, and create a fair app ecosystem, where users can enjoy diverse content at lower prices."

Last Thursday (Aug 26), Apple agreed to loosen App Store restrictions for small developers, allowing them to promote payment options outside Apple's payment system.

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

Join ST's Telegram channel and get the latest breaking news delivered to you.