South Korea ends Apple, Google control of app store payments

The South Korean government has voted to force Apple and Google to accept alternative payment in the App Store, threatening the companies' exclusive commission.

As expected, the South Korean plenary vote of the country's National Assembly has backed the Telecommunications Business Act. Apple and Google will no longer be able to require developers to sell apps via the App Store, and pay the companies' commission.

According to the Wall Street Journal, the bill has to now be signed into law by President Moon Jae-in. As well as blocking Apple and Google from exclusively using their own in-app payment systems, the new law will also ban them from unreasonably delaying or deleting apps.

These further conditions are intended to prevent the companies retaliating against app makers who choose to use alternative payment systems.

Should Apple or Google fail to comply with the new law, the government will fine them up to 3% of all of the revenues that the company earns in South Korea, including hardware sales.

"South Korea's new app store law is a significant development in the global fight to bring fairness to the digital economy," said Meghan DiMuzio, Executive Director of the Coalition for App Fairness. "We applaud South Korean lawmakers and President Moon Jae-in for setting an example for the rest of the world to hold app store gatekeepers accountable for their harmful and anti-competitive practices. The Coalition for App Fairness hopes U.S. and European lawmakers follow South Korea's lead and continue their important work to level the playing field for all app developers and users."

The vote comes after lobbying from Apple, Google, and other technology groups. Apple maintained that the provisions of the Telecommunications Business Act would mean the App Store could no longer stay the trusted place for downloading apps.

"User trust in App Store purchases will decrease as a result of this proposal," Apple said in a statement, "leading to fewer opportunities for the over 482,000 registered developers in Korea who have earned more than KRW8.55 trillion to date with Apple."

For its part, Google also stressed that a decision to pass the law would be damaging for both developers and consumers.

However, speaking before the vote, Korea Communications Commission Chairman Han Sang-hyuk said that work could continue on precisely how the law would be implemented.

"Adjustments can be made in executing the policy," he told reporters. "We are fully aware of the concerns of Apple and Google, so we will implement them in consideration of both industry stakeholders and users."

As yet, it is not clear whether the White House will respond to the vote. According to the Information Technology Industries Council in the US, South Korea's bill could be in violation of joint trade agreements.

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110 Comments

22july2013 3725 comments · 11 Years

About 3 years ago

Now we find out if Apple/Google are willing to fight back.

aderutter 622 comments · 17 Years

This will have far reaching effects, so really hope Apple & Google simply pull the app-store from South Korea.
I

CloudTalkin 916 comments · 5 Years

aderutter said:

This will have far reaching effects, so really hope Apple & Google simply pull the app-store from South Korea.
I

Imo, neither company is going to pull it's app store from SK. That's silly. SK is just the first in a line of countries that are probably going to pass similar legislation. Neither Apple nor Google is going to leave those countries either. Again, because it's silly. Google has one issue (alternative pay system) and Apple has two (alternative pay system and alternative app stores). The only thing that will have an impact on either store is the option of alternative pay systems. Google has always lived with the specter of alt-stores and that threat has amounted to nothing of consequence. Imo, it will be the same on the iOS side. People are going to continue to go to the App Store just like they continue to go to the Play Store (even though there have been dozens of alt-stores since the beginning of Androids existence)

The alt-pay systems might have a small impact initially. Might. My guess is both companies will have an indicator on apps that use their pay systems so customers know when an app uses an alternative. Dollars to doughnuts, the vast majority of people will gravitate towards what they know, Apple and Google.

Forum people are all up in arms over what will amount to a nothing burger imo.

harrykatsaros 89 comments · 8 Years

aderutter said:

This will have far reaching effects, so really hope Apple & Google simply pull the app-store from South Korea.
I

100% agree. Pull the stores and leave South Korea scrambling until consumers rip the government a new one for trying to fix something that wasn’t broken. People retaliating against this legislation will prevent other countries from attempting to do the same. Allowing alternative stores opens up the platform to a world of hurt. There’s a reason I don’t use Android. I don’t want my experience as a consumer to be ruined or compromised because some clueless government bureaucrats half way around the world went on some bullshit self righteous crusade in seek of good press.

goofy1958 166 comments · 13 Years

harrykatsaros said:

aderutter said:

This will have far reaching effects, so really hope Apple & Google simply pull the app-store from South Korea.
I

100% agree. Pull the stores and leave South Korea scrambling until consumers rip the government a new one for trying to fix something that wasn’t broken. People retaliating against this legislation will prevent other countries from attempting to do the same. Allowing alternative stores opens up the platform to a world of hurt. There’s a reason I don’t use Android. I don’t want my experience as a consumer to be ruined or compromised because some clueless government bureaucrats half way around the world went on some bullshit self righteous crusade in seek of good press.

Just because other app stores are allowed, doesn't mean that you have to download apps from them. Stick with the Apple app store, and there is no change for you (or me). I would never go to another app store other than Apple's, so not a big deal to me. If people want to be stupid and download unknown apps from another site, that is on them, and one thing I really hope Apple does is have some sort of disclaimer that if you do, you may void your warranty.