Explained | How does South Korea’s anti-Google law free in-app payments?

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The story so far: On August 31, the South Korean parliament passed an amendment to the country’s Telecommunications Business Act that was dubbed the anti-Google law. The law effectively prevents the dominant app store operators of Google and Apple from forcing South Korean app developers to use their in-store payment systems. This effectively prevents Apple and Google from charging fees on payments made in their app stores. The law also authorizes the South Korean government to intervene in payment disputes within app stores and to arrest app store operators to delay the publication of apps or delete them.

What have Google and Apple done?

The Google Play Store and Apple App Store strictly regulate how apps in their environment charge their users money. Until recently, app publishers were only allowed to implement proprietary payment systems from Google and Apple to raise money from app store users for digital purchases, which include the apps themselves, or in-app purchases as content. or additional services. Google and Apple have charged a 30% commission on all these purchases. As many app developers started dismissing what they said was a steep fee, Google announced in March of this year that it was reducing the fee to 15%. However, it later announced that the change had been postponed to March 2022. In November 2020, Apple reduced its fee to 15% for developers with less than $ 1 million in annual sales on its platform. On September 2, in response to a fair trade investigation in Japan, Apple changed its policy to allow some app developers such as Netflix and Spotify to add links that will send their users outside the app to make payments. , effectively bypassing his commission. Recently, in response to a lawsuit in the US, Apple agreed to allow app developers to email users about other payment options. On the app front, Google takes a more relaxed approach than Apple, which doesn’t allow users of its iPhones to download apps from sources other than the App Store. Google’s Android phones can sideload apps; that is, download and install apps from websites or other sources. Android phones also support downloads from multiple app stores.

What Makes South Korean Law Important?

It’s the first legal restriction on Google and Apple’s control over how money changes hands within their app stores. This could become a model for the many countries that have been looking for ways to control the weight of these online giants taking a cut in the digital sales of everyone from the gaming industry to publishers. The European Union has a draft digital market law in the works that would force large internet gatekeeper companies that serve as platforms for others to conduct transactions to change their business practices and level the playing field for smaller companies. In the US, senators have tabled a South Korean-like bill that would force Apple and Google to allow app makers to implement different payment systems. There are more problems coming to the US as a federal judge is about to rule on the case of Epic, the creators of the video game Fortnite, against Apple’s in-app payment practices. Epic is suing Google in a separate case but for the same reasons. Adding to Google’s Troubles is another case from 36 US states. In another indication that the trend is spreading globally, Reuters reports that Apple is facing a legal challenge to its in-app payment system in India. The case is reportedly under review by the Competition Commission of India.

How did Apple and Google respond?

Both companies indicate the cost of maintaining the app store environment to justify the fees. Responding to The Verge, an American tech news website, about South Korean law, Apple said opening the payment system will expose users to fraud and security breaches. Google claims that these allegations are one of the main reasons why it is able to keep its Android mobile phone operating system free and thus reduce the cost of the phones running on it. Just as it costs developers money to build an app, it costs us money to build and maintain an operating system and app store, a Google spokesperson told The Verge. Think carefully about how to comply with this law by maintaining a model that supports a high-quality operating system and app store.

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