Apple and Google's monopoly on domestic payment systems is now outlawed (so far only in Korea)

South Korea has passed a bill banning owners of major platforms, such as Google and Apple, from restricting app developers to embedded payment systems. The bill is expected to be signed into law by President Moon Jae-in, whose party has championed its passage.

The law has been a nasty blow to Google and Apple's business processes, which require that in-app purchases only go through their own, not third-party payment systems. This allows the tech giants to receive between 15% and 30% on every payment a user makes inside iOS and Android apps. If tech companies fail to comply with the new law, they could face fines of up to 3 percent of their revenue in South Korea.

The law is an amendment to South Korea's Telecommunications Business Act, and it could have a big impact on how Google and Apple do business in the rest of the world. There is no doubt that other countries will try to pass similar amendments to local laws.

Google's Response

Google's senior director of public policy responded with the following statement:

Although the law has not yet been passed, we are concerned that the rushed process has not allowed for sufficient analysis of the negative impact of this legislation on Korean consumers and app developers. If the law is enacted, we will study its final version and determine how best to continue to provide developers with the tools they need to build successful global businesses while providing a safe and trustworthy experience for consumers.

Apple's Reaction

An Apple spokesperson also reacted to the new law:

The proposed Telecom Business Act would expose users who purchase digital goods from other sources to fraud, undermine their privacy protections, make it difficult to manage purchases, and features such as "Ask to Buy" and parental controls would become less effective. We believe user confidence in App Store shopping will decrease as a result of this proposal[...].

Unfortunately, South Korea is not the only country trying to bend American tech giants to its will. Russia is demanding that apps created by Russian developers be pre-installed on gadgets, and Australia is considering its own regulation of services like Apple Pay and Google Pay. Even some US government officials have proposed legislation similar to that adopted in South Korea.

Source: wsj 

Illustration: Elle Morre