Regulators in South Korea are likely to effectively stop Google and Apple from charging software developers to pay them commissions on in-app purchases by preventing the tech giants from requiring developers to use their payment systems.

If this regulations is implemented it would be the first time that such an actions would be taken on the tech giants by a major economy.

It is expected that the amendment of the Telecommunications Business Act, dubbed the “Anti-Google law,” would be passed by the country’s parliament’s legislation and judiciary committee. The legislation is aimed at the app store operators that have a dominant market position.

After the likely approval of the bill in the parliament, it would likely be put t6o a final vote the next day.  

A number of lawmakers in South Korea have been pressing the government on this issue of the tech companies charging a commission since the middle of last year.

No comments on the possible new regulation were available from Alphabet Inc’s Google and Apple Inc.

In recent times, there have been criticisms globally of the business practices of the two companies in question as both the companies have made it mandatory for software developers to use proprietary in-app payment systems while they use the app stores of the companies. They charge a commission up to 30 per cent of transactions or sales made through app stores.

“For gaming apps, Google has been forcing app developers to use its own payment system … and it wants to expand its policy to other apps like music or webtoon,” said Kwon Se-hwa, a general manager at the Korea Internet Corporations Association, a nonprofit group representing Korean IT firms.

“If the new bill becomes the law, developers will have options to use other independent payment systems,” Kwon said.

The Digital Markets Act was proposed by the European Union last year. The Act is aimed at tackling the app store commissions charged by tech companies. While the proposed regulations in the Digital Markets Act encompass all large tech companies, there are some lawmakers of the EU who have pressed that the new regulations should be specifically aimed at American tech giant, claimed reports published in June this year.

A new bill that would rein in app stores of companies was introduced by a bipartisan trio of senators in the United States earlier this month. The Senators argued that such app stores exert too much market control. These included the apps stores of Apple and Google.

According to a government report published last year, revenue of nearly 6 trillion won ($5.29 billion) in 2019 was earned by Google Play store in South Korea, home of the Android phone maker Samsung Electronics Co Ltd.

Google announced earlier this year that it will bring down the in-app purchase commission charges from 30 per cent to 15 per cent for the first $1 million that the company will earn in revenues from its app store. A similar move has also been made by Apple.

The total average revenue from the services business of Apple is about $53.8 billion and the commissions from in-app purchases comprise a key proportion of the revenues. It is also major expense for many app developers.

(Adapted from TodayOnLine.com)