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Seoul bans Apple and Google from taxing app purchase payment system

South Korean MPs passed a law on August 31 that forced Apple and Google to give up their monopoly on payment systems for the purchase of applications. A similar law was introduced in the United States by three senators.

South Korean lawmakers passed a law on August 31 that banned Apple and Google from forcing app developers to use payment systems developed by the two entities. This would effectively make their monopolies on iOS and Android through the App Store and Play Store illegal.

The bill was passed with 180 votes in favor, zero against. South Korea has thus become the first economic power to equip itself with such a legislative arsenal, which could set a precedent on a global scale. It will allow users to choose a different payment system when purchasing app.

A world first that can be emulated?

“This law will certainly set a precedent for other countries, as well as for app publishers and content creators around the world,” Kang Ki-hwan of the Korea Mobile Internet Business Association told AFP.

The adoption of this text also comes at a time when Apple and Google are singled out in terms of commission on transactions made on their payment systems. The two giants would indeed take a commission of 30%.

Google had other plans, however, according to AFP. The web giant aims to impose its payment system on a global scale for in-app purchases, always taking care to take a commission of 30% above a certain threshold.

In South Korea, Google also intended to free itself from the rule which required it to take commission only for online games in order to charge for any paid content. An announcement that aroused the ire of artistic circles, in particular web fiction writers or webtoons artists who supported the bill.

The giants Apple and Google reluctant to change the law

On the side of Apple and Google, on the contrary, it is considered that the commissions are legitimate. In particular, they would guarantee any buyer to proceed with their purchases in complete safety but also to offer visibility to developers. Apple had thus declared to AFP some time before the debate of the bill that the latter would open the way to fraud but also to data theft.

“We believe that user confidence in App Store purchases will decline after this proposal, which will reduce opportunities for Korea’s more than 482,000 app makers who have earned more than $ 8,550 billion. won (6.2 billion euros) to date with Apple, ”the US giant said in a statement.

Despite the reluctance of the web giants, the United States also seems ready to debate similar legislation. Three senators have tabled a law aimed at regulating the two dominant firms and forcing the Google-Apple duopoly to open up much more to competition.

Google’s Play Store generated nearly 6 trillion won (US $ 4.3 billion) in revenue in 2019, or 63% of total app sales in South Korea, followed by the App Store in South Korea. Apple, which accounted for 24.4%, according to data from the South Korean Ministry of Science.

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