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| Revisions to the Telecommunications Business Act are being passed at the National Assembly's plenary session on Yeouido, Seoul, Tuesday. The revisions block dominant platform operators such as Google and Apple from requiring app developers on their app stores to use the tech giants' payment systems. Yonhap |
By Kim Bo-eun
Korea's passage of the world's first law barring dominant platform operators' control over app market payments is drawing attention to its market impact.
The bill that passed the National Assembly's main session on Tuesday bans app market operators such as Google and Apple from imposing a certain means of payment on app developers.
This means Google and Apple will have to allow payments via outside services on their app stores. The passage of the bill could have a "ripple effect" around the world, given Google has introduced its in-app payment policy in a number of countries. It will accelerate moves by regulators in the United States and the European Union to diminish the dominant status of platform operators such as Google to provide fairer competition for other entities in the market.
Google had planned to introduce in October a policy requiring app developers on Play Store to use its payment system charging a 30 percent fee, while allowing a grace period until next April at the developers' request. But the planned introduction of the policy met a strong backlash from app developers, prompting lawmakers in July last year to prepare revisions to the Telecommunications Business Act to bar Google's move.
Google's policy would have burdened local app developers with hefty fees, as its Play Store remains the dominantly used app store here. According to the Korea Mobile Internet Business Association, Google has a 66.5 percent share in the local market, followed by Apple with 21.5 percent and One Store with 11.7 percent.
But despite the passage of the bill, Google is expected to seek to charge a fee for app developers that use third-party payment systems, given its planned policy was to collect more fees to increase revenue. Google is set to be pressured to lower the fee substantially below 30 percent, but will still seek a fee as the dominant app market operator.
"We'll reflect on how to comply with this law while maintaining a model that supports a high-quality operating system and app store, and we will share more in the coming weeks," Google said in a statement following the bill's passage.
But given the moves of regulators around the world, and sentiment against the dominance of platform operators, Google is in a tricky situation.
"Even if app developers are able to use their own payment systems, Google will still likely impose a fee for this. Considering app developers also need to pay a fee to credit card companies, in the case the total rate exceeds 30 percent, app developers may end up going back to Google's payment system," an industry official said. "Following the bill's passage, Google said it plans to introduce a new business model, and it will act quickly to protect its own interests."
Local app store operator One Store could become the top beneficiary, if Google imposes a fee of more than 5 percent, given this is the rate One Store charges app developers for using their own payment systems. App developers' fees being lightened would also benefit app users. But concerns still prevail.
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