South Korea has been actively working to eliminate exclusive payment requirements on app stores. Progress is being made as a bill moves closer to becoming law, which could significantly impact Google and Apple.
If the bill is successfully passed by the National Assembly in South Korea, it will mandate that both companies allow developers to utilize alternative third-party payment systems on the Play Store and the App Store. This move threatens the substantial cut of 15% to 30% that these companies currently take on every digital purchase.
According to reports from the Wall Street Journal, the bill has garnered an impressive amount of support. Currently, 180 out of 188 legislators have expressed their backing for the bill, which is expected to be signed into law by President Moon Jae-in.
The proposed legislation includes strict penalties for non-compliance. Companies failing to adhere to the new regulations may face a penalty of 3% of their total income. For instance, if we consider Google’s revenue of 220.14 billion won last year, a 3% penalty would amount to 6.6 billion won (approximately $5.7 million).
In response to the bill’s progression, Google has expressed concerns that the requirement to allow third-party payment systems could jeopardize the free pricing of the Android platform. However, the tech giant has also indicated a willingness to assess how they can comply with the new law.
Google and Apple continue to face scrutiny over their app store policies from various quarters. This new legislation in South Korea and similar actions in Australia are aimed at reshaping the app store landscape to ensure fair competition.
In the United States, Google is facing antitrust lawsuits from multiple state attorneys general, in addition to the ongoing consideration of the Open Markets Act by the US Senate. Moreover, the legal battle between Epic Gaming, Google, and Apple has shed light on some controversial app store practices, tarnishing Google’s image.
If the South Korean bill is enacted into law, it will represent a significant global move. Google and Apple would need to treat the Play Store more in line with the broader internet, potentially allowing larger developers like Amazon, Netflix, and Epic to bypass intermediaries and increase their profits.
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