Home Business First country to curb Google, Apple’s in-app billing policies

First country to curb Google, Apple’s in-app billing policies

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Visitors look at Apple Inc. iPhones and iPads on display at the SK Telecom Co. T Factory flagship store in Seoul, South Korea, June 11, 2021.

SeongJoon Cho | Bloomberg | Getty Images

South Korea has become the first country to impose curbs on Google and Apple’s payment policies that force developers to only use the tech giants’ proprietary billing systems.

Those policies usually require developers to pay Google and Apple a commission as high as 30% in every transaction.

The South Korean parliament approved a bill on Tuesday that will ban major app store operators — like Google and Apple — from requiring developers to use their payment systems to process the sale of digital products and services.

It means that developers can avoid paying commission to Google and Apple by directing users to pay via alternate platforms.

A Google spokesperson said its service fee “helps keep Android free, giving developers the tools and global platform to access billions of consumers around the world.”

“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,” the Google spokesperson added.

Apple did not immediately respond to CNBC’s request for comment.

The law, sometimes referred to as the Anti-Google Law, was submitted to parliament last August, according to Yonhap News.

Some 180 lawmakers out of 188 voted in favor of passing amendments made to the Telecommunications Business Act, Reuters reported.

Media reports last week said the legislation and judiciary committee of the National Assembly approved revisions of a bill aimed at stopping app store operators from forcing developers to use specific payment systems.

Regulatory scrutiny

Regulators worldwide are focusing more on the app stores and fees that Google and Apple are charging developers — and the ruling in South Korea will likely be the first step toward greater scrutiny, according to Daniel Ives, managing director of equity research at Wedbush Securities.

“It’s a potential watershed moment,” Ives said on CNBC’ “Street Signs Asia” on Monday ahead of the decision in Seoul. “Not necessarily for what this means in itself, but for the ripple effect as it shows that they’re not just words, but actually actions.”

Ives added that while there might be monetization opportunity for others, such as telecommunication services providers, it ultimately depends on how consumers would respond.

“The question is what will consumers ultimately do? Because the path of least resistance is to go through Apple and go through Google – and that’s what consumers have gotten used to,” he said.

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