South Korea’s parliament passed a bill to end Apple’s monopoly on Google’s App Stores. This is expected to reduce overpayments from Apple’s and Google App Stores’ payment systems. Before it can be made into law, it needs to be signed by Moon Jae-in, South Korean President. It was the first country to adopt such a law in the world.
This move comes amid increasing global scrutiny of Google & Apple for their requirement that developers use their proprietary payment system to purchase digital goods in their app stores. These fees can reach up to 30%.
App market operators have been challenged by developers around the globe about their exclusive in-app payment system. They are opposed to the high commissions they receive and demand that they be allowed to use other systems.
It was also revealed that the latest South Korean legislation will allow app developers to choose to use other payment methods. This could signal a shift in the way Google and Apple manage their app markets. The report stated that local tech groups opposed the move. They called it a monopolistic step and claimed it would lead to an increase in prices for the wider digital content industry.
The legislative movement was initially met with fierce opposition amid concerns about a possible trade conflict with the USA. It essentially targeted US companies. South Korean legislators approved Tuesday amendments to the Telecommunications Trade Act to encourage fair competition in the app market.
This bill bans app market operators from taking advantage of their dominant position and forces developers to use a certain payment system. It also prohibits AppStore service providers from engaging with activities such as preventing applications from registering on their store, delaying app registrations unreasonably, and removing apps unfairly from the App Market.
This will allow app developers to avoid large commissions and reduce costs for end-users as well. The bill also empowers South Korea’s Minister of Science/ICT to investigate the operation and functioning of the app market. This will allow the government to be more proactive in resolving disputes related to the market while still taking into consideration consumer interests. To identify and stop acts that hinder fair competition.
Rakesh Deshmukh is the co-founder and CEO of India’s largest third-party app store, Indus App Bazaar. He has also expressed his support for this move. He said that the policy must support innovation. We hope that listing app distribution platforms such as Indus App Bazaar in the Google Play Store will increase developer choice. This will allow us to travel B2C. App stores such as ours should be allowed to have fair access to Google Play and Android. We need to consider India’s policy perspectives on app distribution and payment gateways.
Sijo Kuruvilla (Executive Director, Alliance of Digital India Foundation) has tweeted his appreciation for the move. He stressed the importance of a fair market and said in a tweet that any law in this area anywhere in the world would set an example for others countries to follow. The Coalition for App Fairness, an app industry association, reacted positively to the developments in the US and called it a significant step forward.
USA Update
A US federal judge has lifted its grip on the App Store’s app store by ruling in an antitrust case against Apple. This decision has allowed millions of iPhone users to access various mobile apps at very affordable prices via the App Store. Apple, which had so far collected a 30% commission on digital transactions for apps uploaded to the App Store, will now have it reduced or eliminated. This could save app developers billions.
App developers may also be able to pass the savings on to consumers by making their apps affordable. Apple is however disappointed by this decision as the commission’s earnings account for a significant portion of its profits. The stock exchange saw a drop in Apple shares of more than 2 percentage points on Friday after this decision.
