South Korea Passes Law Requiring App Stores to Allow Third-Party Payment Processing for In-App Purchases

Jiyoung Sohn, reporting for The Wall Street Journal from Seoul (News+):

Google and Apple Inc. will have to open their app stores to alternative payment systems in South Korea, threatening their lucrative commissions on digital sales.

There’s some counting of unhatched chickens in the above sentence, but that’s certainly the intention of the law.

A bill passed Tuesday by South Korea’s National Assembly is the first in the world to dent the tech giants’ dominance over how apps on their platforms sell their digital goods. It will become law once signed by President Moon Jae-in, whose party strongly endorsed the legislation.

The law amends South Korea’s Telecommunications Business Act to prevent large app-market operators from requiring the use of their in-app purchasing systems. It also bans operators from unreasonably delaying the approval of apps or deleting them from the marketplace — provisions meant to head off retaliation against app makers.

Companies that fail to comply could be fined up to 3% of their South Korea revenue by the Korea Communications Commission, the country’s media regulator.

I have a rough English translation of the law, and my understanding is that the above ban on “delaying” or “deleting” apps is specifically related to retaliation for using their own payment processing. It’s not a ban on removing apps from the stores for just cause. The law even requires app store operators to take precautions against harm to users from content and to protect the rights and interests of users. (I italicized rather than quoted that because, as I said, it’s a loose and very much unofficial English translation.)

The bill — which in Korean has been nicknamed the “Google power-abuse-prevention law” by some lawmakers and media — was welcomed by groups representing South Korea’s internet-technology companies and startups, as well as local content developers and app makers.

Fascinating to me that the bill is nicknamed the “Google power-abuse-prevention law” in Korea, but U.S. news coverage is focused on Apple at least as much, if not more so. StatCounter pegs Korean mobile market share at 71% Android, 28% iOS. Update 1: Makes me wonder how much this bill is anti-Google and how much it’s pro-Samsung. It may not be coincidence that it’s from South Korea, of all countries.

Update 2: A very good question to which I do not know the answer: How long does this South Korean law give Apple and Google to comply? Supposedly it’s expected to be signed into law in two weeks — does it apply immediately?

★ Tuesday, 31 August 2021