Daily Management Review

South Korea to become first to oblige Apple and Google to allow third-party payment systems


South Korea is the first country in the world to approve a law that would strip Apple and Google of their monopoly on in-app payments on their platforms. They now receive up to 30% of each transaction.

South Korea's National Assembly has approved a bill that would require Apple and Google to allow payments through third-party payment systems in their app shops, The Wall Street Journal reported. It is the first such document in the world, the newspaper noted. It will become law after the president signs it.

The law prohibits major app players from requiring the use of their own payment systems for in-app purchases. It threatens both companies' revenues from the commission they receive from each transaction. The fee is 30%, but both Apple and Google have reduced it to 15% for smaller developers with less than $1 million in revenue through their respective app shops. The law also prohibits app shop owners from unreasonably delaying approval of apps or removing them from the shop. A violation could result in a fine of up to 3% of a company's revenue in South Korea.

South Korea's law will set a precedent for other regulators, including those in the US and the European Union, which also want to take control of large global IT companies, Seoul National University business professor told WSJ. Apple warned on August 25 that risks of fraud and privacy breaches would increase if third-party payment systems were allowed. Google's top executive said at the time that the "hasty" process of passing the law left no time to analyse the negative consequences for Korean consumers and app developers.

In August, a similar bill was introduced in the US Senate, which also prohibits Apple and Google from using only their companies' payment systems.

source: ft.com