Apple, Google’s in-app purchasing commission domain will likely be contained by South Korea

South Korea will likely prevent Alphabet’s Google and Apple from charging software developers’ fees for in-app purchases, the first of these restrictions in a large economy that could hurt the tech giants’ lucrative revenue streams.

Legislation from parliament and the judiciary committee is expected on Tuesday to pass amendments to the Telecommunications Business Act, dubbed the “anti-Google law,” which prohibits app store operators with market-dominant positions from forcing certain payment systems .

If the project is approved by the committee, it will be put to a final vote on Wednesday. South Korean lawmakers began raising the question of the tech giants’ committee structure since the middle of last year.

Apple and Google have faced global criticism for requiring software developers who use their app stores to use proprietary in-app payment systems that charge commissions of up to 30 percent on in-app purchases.

The European Union last year proposed the Digital Markets Act, targeting app store commissions. The rules were designed to affect big companies, but some European lawmakers favor tightening them to specifically target American tech giants, Reuters reported in June.

Earlier this month in the United States, a bipartisan trio of senators introduced a bill that would control the app stores of companies they say have a lot of market control, including Apple and Google.

In South Korea, Android phone maker Samsung’s home market, the Google Play Store earned nearly KRW 6 trillion (about INR 38,140 crores) in 2019, according to a government report published last year.

Earlier this year, Google said it will reduce the service fee it charges developers in its app store from 30 percent to 15 percent on the first $1 million (about Rs. 7.4 crores) it they gain in revenue in a year. Apple made similar moves.

For Apple as well, in-app purchase commissions are an important part of its $53.8 billion (about Rs. 3,990 crore) services business and are a big expense for some app developers.

In May, an antitrust lawsuit brought by the popular game maker Fortnite against Apple revealed that the game maker had paid $100 million (about Rs. 740 crores) in commissions to Apple over two years.

© Thomson Reuters 2021


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