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Seoul: South Korea is expected to become the first country to pass a law ending the dominance of payments by Apple and Google on their mobile platforms, setting a potentially radical precedent for their lucrative App Store operations everywhere from India to the US. Is.
Apple Inc. and Alphabet Inc. Google, the dominant monopoly that controls most of the world’s smartphones, faces legislative measures in the US scoldingly Urged to curb their “gatekeeper control” and their power to set terms on the app marketplace. Both typically charge 30% on purchases made through their stores and exclude alternative payment operators, arguing this protects users from fraud and privacy invasion.
Now the government of Korea is taking direct action to end that dominance. The Telecom Business Act will mandate users to provide a free choice of in-app payment providers. bill that is almost certain to pass an assembly vote Monday Given the ruling party’s super-majority, Fortnite opens the door for companies like creator Epic Games Inc. to transact directly with users and circumvent the platform’s owner’s allegations. Epic has taken iOS and Android owners to court in various jurisdictions, arguing that their fees are unreasonable.
“It could predict similar action elsewhere,” the Omdia analyst said. Guillermo Escoffet, which specializes in digital consumer platforms. “Regulators, lawmakers and litigants in North America and Europe are also scrutinizing app-store billing rules, and the overriding political mood has turned hostile to the enormous amount of power concentrated in the hands of the tech giants.”
Korean lawmakers have made their move ahead of Google’s plans to introduce its 30% commission fee in October, reversing a one-year exemption for the country. Its announcement last year that would make its payment system mandatory for non-gaming apps is widely seen as the trigger for the new law – locally known as the anti-Google law.
The controversy over the commission emphasizes how Apple and Google have maintained their dominance since the dawn of the global smartphone era a decade ago. Apple Settled A broad class-action lawsuit with US app makers on Thursday, but without agreeing to major changes to its policies.
The revenue streams in question are central to profit growth for both Apple and Google. According to Sensor Tower, the iPhone maker’s App Store makes extensive efforts to drive revenue from services and subscriptions, which generate about $20 billion annually. Google’s Android user numbers are booming as India’s population moves online with the help of mobile devices, and app fees are a significant way the company monetizes its otherwise free software.
Read also: Why switching from iPhone to Android Galaxy is like getting a taste of the future
Big Tech vs. Local Players
The impacts extend well beyond the world of just $142 billion apps. This conflict is not only between Apple and Google but also Amazon.com Inc. and Facebook Inc. It strikes at the fundamental role played by the U.S. as the new gatekeeper of the digital economy. In a decade, all four companies have created huge online marketplaces that their rivals do business on.
Korea is one of the few regions where local players like Naver Corp and Kakao Corp dominate, though they are under threat: YouTube became the country’s top video service this year, for example, ousting Naver.
Lawmakers have now echoed their US counterparts, saying that the absence of competition exposes both consumers and developers to the whims of both. In India, startup founders have been particularly Vocal About to close.
“The mood has changed over the years,” said Kim Dohyon, a business professor at Kookmin University and director of the Korea Startup Alliance. “The in-app billing system creates a huge barrier to entry for startups that are not making profits.”
Apple said developers in the country have earned more than 8.55 trillion won ($7.3 billion) on the App Store so far. According to the Korea Mobile Internet Business Association, mobile app and content sales totaled about 7.5 trillion won last year and are projected to grow 21% to 9.1 trillion won this year. Google handled about 67% of them through its Android operating system, Apple did 22% in its iPhones and iPads, and the rest came through the One Store of local operator SK Telecom Co.
Google has described the legislative process in South Korea as hasty, while Apple has said the provisions would undermine parental controls, privacy and trust. It’s unclear how the White House will respond, given the tech companies’ efforts back home to curb the huge influence.
Apple and Google are lobbying politicians to block its route to South Korea, a US ally and trading partner. But some officials have tried to play down the concerns.
“Adjustments can be made in implementing the policy,” Han Sang-hyuk, chairman of the Korea Communications Commission, told reporters on Thursday. “We are fully aware of the concerns of Apple and Google, so we will implement them with both industry stakeholders and users in mind.” bloomberg
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