Apple, Google cannot restrict developer access to other payment systems, says new Korean law

The National Assembly in South Korea has passed a bill that seeks to stop major platforms such as Apple and Google from forcing app developers to use their built-in payment systems, The Wall Street Journal reported. President Moon Jae-in, whose party was among the most vocal champions of the law, is expected to sign the bill into law, whose party championed the legislation.

The law would be a blow to Apple and Google, both of which require in-app purchases to be routed through their systems only, thus enabling them to take a 30 per cent cut. If the tech companies failed or refused to comply with the new law, the legislation enables the competent authority to slap fines of up to 3 per cent of the companies’ revenue in South Korea.

The law, an amendment to South Korea’s Telecommunications Business Act, could potentially have a huge impact on how Apple’s App Store and Google’s Play Store do business.

Both the companies have come under increasing scrutiny over their restrictive strategies in several countries. Now, many of these countries will see if the South Korean law can be used as a reference for similar measures in their markets. The Competition and Consumer Commission in Australia is also mulling legislation to regulate Google, Apple, and WeChat’s digital payments system.

The South Korean legislation has irked both Apple and Google. Google said the service fees helped keep Android free, and also gave developers the global platform and tools to access billions of users the world over.

While Apple did not immediately respond to the new legislation, it had earlier told The Verge that the proposed South Korean law would put users, who use other sources to purchase digital goods, at risk of fraud and undermine privacy.

Lobbyists in Washington for both companies have reportedly argued to US officials that the legislation violated a trade agreement as it seeks to control US-based companies.