Last year, South Korea became the first country to approve legislation changing the policies of Google and Apple Inc. on how apps on their platforms sell subscriptions, game items, and content. other online content. The law prohibits Google and Apple from forcing apps to use their own in-app payment systems, giving developers more options and potentially avoiding service fees of up to 30%. The law governing app stores came into effect in September last year. However, the Korea Communications Commission (KCC) did not issue final enforcement instructions until March. Google and Apple are still working on a regulatory compliance strategy to satisfy Korean authorities.
Google had recently tried to ban app developers from giving an in-app link to an external website to buy digital goods. This practice is known as “outbound linking” and avoids Google fees. According to Google, those who provided external links could not update their apps starting this month, and their apps could be removed from the Google Play Store by June 1. However, the KCC issued legal guidelines stating that Google’s actions would violate South Korea. app payment law by forcing apps to use a single payment method and making it difficult to provide alternative options.
In South Korea, Google and its Android operating system have a substantial market share. According to Counterpoint Research, a digital industry research organization, Samsung Electronics Co., the local brand that runs Android, controls 72% of the local smartphone market, compared to Apple’s 21%.
According to Google, the company is studying KCC guidelines and will look for ways to continue investing in the Android ecosystem while working with local app developers to improve customer choice. The tech company previously said it would continue to charge 4 percentage points lower costs on in-app payments managed through third-party payment providers to help with the additional costs developers incur to support their payment systems. billing. According to Google, the commission can be as low as 6% for e-book providers when users choose alternative systems, instead of 10% using Google’s billing system, and up to 26% for apps. popular mobile games.
However, according to the Wall Street Journal, Apple, which charges 30% fees for in-app purchases worldwide, has yet to implement policy changes consistent with South Korean law. According to the KCC, Apple has expressed a desire to cooperate. Apple has yet to respond to the KCC’s new legal instructions.
The world of competition regulation and policy will likely follow developments in the way Korean law is enforced. Several legislative projects follow the Korean example. For example, we have covered the development of the Open App Markets Act in the United States
Read more: Senate Judiciary Committee Approves App Store Payments Bill
According to the proposed bill, app stores with more than 50 million users in the United States will not be allowed to require developers to use the platform’s payment system as a condition of distribution. Also, app stores won’t have the power to ban or penalize developers who sell their programs at different prices in different places. Additionally, the bill requires retailers to allow developers to communicate directly with users for legitimate business purposes. Google and Apple have come out against the plan, saying it could compromise consumer privacy and lead to poor user experience.
Read more: South Korean regulator issues rules on in-app payments