The legislation and judiciary committee in South Korea have voted in favour of banning Google and Apple from forcibly charging developers commissions on in-app purchases. 

The amendment will go to a final vote held by the National Assembly in South Korea between August 27th and 30th. 

If finalised, South Korea will be the first major economy to take this step towards removing digital giants from monopolising payment methods. The move may set a precedent for the UK and other global governments.

The legislation would amend the Telecommunications Business Act, colloquially called the “Anti-Google law”, preventing market dominance from tech giants and cutting their profits.   

Mark Buse, a founding member of the Coalition for App Fairness (CAF), has said the law is “vital and inevitable”, adding that other countries should follow South Korea’s lead. 

In an interview with Korea JoongAng Daily, Buse said that this movement is “very meaningful” for app creators.

In recent years, both Apple and Google have been globally criticised by app developers for charging up to 30% commission with each in-app purchase made through apps on their digital stores. 

Currently, developers have to use Google’s payment systems in order for consumers to make app purchases. This system is set to extend to their other services, including the downloading and listening of music. 

Wilson White, the senior director of public policy at Google, has called the process “rushed” and claims that it “hasn’t allowed for enough analysis of the negative impact of this legislation on Korean consumers and app developers.”

Recommended

• Seven dynamic fintechs making waves in Scotland right now
• Glasgow Uni reveals ‘super immersive’ 5G remote robotics
• The spy who loved me – how Apple are failing stalkerware victims

Industry experts believe that app store operators can still ensure that transactions are secure by working with external developers and companies. South Korea in particular, is known to be a world leader in providing legal protections for online transactions. 

App developers will have the option to choose how user’s payments are taken from other independent systems. There is a concern that this will make transactions less secure. 

On Tuesday, Apple released a statement saying that the bill will mean users are “at risk of fraud” and will have their privacy protections undermined. 

The statement also raised concerns about a drop in user trust when making App Store purchases and the knock-on effects of this for South Korean developers.

Currently, there are over 482,000 registered Korean developers who have earned more than ₩8.55 trillion Korean won (£5.3 milllion) through Apple. 

Adam Hodge, U.S. Trade Representative Office member, has said that U.S. officials need to consider how to strike a balance between US tech companies and the Biden administration, who are pushing to increase competition in the industry.  

In the EU, there have been movements towards a similar decision. In December 2020, the European Commission put forward the Digital Markets Act. The act is designed to prevent large online platforms from becoming ‘gatekeepers’ and encourage a more fair market. 

The European Commission hopes that this would encourage technology start-ups to compete in the online environment and give consumers the opportunity to switch between providers, should they choose to do so. 

Non-compliance could mean a fine of up to 10% of the company’s total worldwide annual turnover.