Korea: Apple and Google Must Comply With New Regulations
Apple and Google have both failed to fully comply with South Korean laws that prevent app store operators from forcing developers to use their own payment platforms. As is well known, Apple and Google, with their respective App Stores and Play Stores, force developers to route all in-app payments through their own systems to collect as much as a 30% share of in-app payments.
Lawmakers say that Apple and Google are not complying with laws that prohibit them from forcing developers to use their payment platforms.
When a law in South Korea was passed, it became the first country to pass a law in a bid to block the tech giant from imposing this “tax” on developers. According to Reuters , an official at the Korea Communications Commission (KCC) said that today (Wednesday), South Korea will reveal what changes technology companies need to follow to comply with the law.
Korean lawmaker Jo Seung-lae was the one who directed amendments to the Telecommunications Business Act in August in a bid to prevent Apple and Google from taking in-app payments cuts. While the law came into effect in September, the Korean Communications Commission (KCC) still has to announce what tech companies have to do to be considered compliant with the law.
Google said it would allow third-party payment processing systems to run Play Store fees in South Korea. But the Alphabet subsidiary also said it would reduce the required cut by four percentage points when such a platform is used instead. Apple told the South Korean government they were in compliance with the law and that no changes should be made.
Jo, the South Korean lawmaker who helped pass the law, said, “Frankly, we are not satisfied. Apple’s claim to have complied with it is absurd. Excessive costs eliminate developer opportunities to innovate. Parliament will be closely informed as the government drafts detailed regulations to ensure there is accountability.”
Epic Games CEO Tim Sweeney, who dared to take over Apple and Google by including a link to Epic’s own payment system within the app for the popular game Fortnite, is a vocal critic of the two tech companies. Fortnite has finally been removed from the App Store and Google Play Store. The executive said, “This is the first legislation worldwide with the opportunity to transform the market from a duopoly with Apple and Google.
But Sweeney won’t be happy just being able to promote third-party payment platforms on the App Store and Google Play Store. He wants Apple and Google blocked from charging any fees to developers who promote third-party payment platforms. This is what Google is doing in South Korea and “damaging the point of competition,” the CEO said.
Apple and Google are too big to lose
The KCC is preparing the details of the regulations that will be reported to the parliamentary committee according to KCC Deputy Chairman Kim Hyun. However, at this stage, it’s unclear what penalties tech companies like Apple and Google will face if they don’t follow the law. An initial draft seen by Reuters calls for penalties of up to “2% of revenue” for app store operators who fail to comply with the law.
But the punishment is certainly not clear. Is it based on global revenue, domestic revenue, or app store revenue? The words here can be the difference between a stiff but affordable fine, and a hefty payout that literally eats away at a company’s finances. However, no matter what the fine, Apple and Google are big enough that any fine won’t feel more like a mosquito bite.