A South Korean Parliamentary Committee voted this week to put forth recommendations to ban Google and Apple from charging software developers’ commissions for in-app purchases. Typically, app developers hope to earn revenue from the apps they create when users choose to upgrade to the app’s paid version that carries more features.
Apple and Google’s Commission Strategy
Apple Inc and Alphabet Inc’s Google have both faced global criticism because they require software developers using their app stores to use proprietary payment systems that charge commissions of up to 30% for the app upgrades that get purchased on their platforms.
How It’s Been Up Until Now
Google and Apple are two “big tech” firms that currently have a carte blanche to monetize app upsells on their platforms. South Korean politicians believe they need to create laws and regulatory compliant legislation that limits the amount of profit these tech giants make off of their country’s small app developers.
The Anti-Google Law
After the South Korean Parliament has an opportunity to vote on this proposed legislation it will effectively be amending its Telecommunications Business Act, now referred to as the “Anti-Google Law”. This amendment will come to a final vote in parliament in the coming weeks.
Apple and Google’s Defence
On Tuesday Apple released a statement saying the bill proposed by the South Korean Parliamentary Committee “will put users who purchase digital goods from other sources at risk of fraud (and) undermine their privacy protections”. While Google’s senior public policy wonks cautioned that South Korea’s “rushed process hasn’t allowed for enough analysis of the negative impact of this legislation on Korean consumers and app developers”.
Protecting South Korea’s Interests
South Korean parliamentarians are trying to look after the best interests of their citizens by limiting the powers of big tech. They perceive that when big tech claws back profits of app developers they are in fact hindering the growth of South Korea’s technology sector. Based on South Korean parliamentary records, the proposed amendment bans app store operators with dominant market positions from forcing payment systems on content providers and “inappropriately” delaying the review of, or deleting, mobile content from app markets.
Other countries are following South Korea’s lead on trying to introduce legislation that will curb the power and dominance of big tech. In August 2021 a bipartisan group of senators in the US introduced a bill that would effectively diminish the power of the app stores like Apple and Google, companies they believe exert too much market control that limits competition.
#ElaineAllan, BA, MBA
#Technology & #Business Blogger
#Vancouver, BC, #Canada