SEOUL, July 20 (Korea Bizwire) — South Korean lawmakers decided Tuesday to press forward with legislation that restricts app market operators from wielding their dominance in determining how digital goods payments are processed in a move widely seen as reining in global tech giants such as Google and Apple Inc.
Over the past year, multiple lawmakers have proposed bills to curb app market operators from imposing their proprietary billing systems on in-app purchases amid growing complaints from local app developers and content creators over high fees.
Last September, Google said it would impose its billing system on all app developers on its mobile Android operating system’s Play store from October this year — a move that will collect up to 30 percent in commission for all in-app purchases of digital goods.
Local tech groups have voiced strong opposition over Google’s move, demanding legislative action to counter the tech giant, which holds a tight grip over the local market.
Sales from the Play store in South Korea were estimated at 5 trillion won (US$4.34 billion) last year, accounting for two-thirds of the country’s total, compared with those from Apple’s App Store at 1.6 trillion won, according to the Korea Mobile Internet Business Association.
After months of review, the National Assembly’s Science, ICT, Broadcasting and Communications Committee decided to proceed with the proposed amendments to the Telecommunications Business Act, which seeks to ban app market operators from forcing certain payment systems on app developers by unfairly using its position.
The bill now heads to the Legislation and Judiciary Committee for further review before being handed off for a vote by all members of the National Assembly as early as this month.
The legislative movement had stalled over fierce controversy among lawmakers as the bill would be the first of its kind globally if voted into law and could overlap with the country’s existing fair trade law.
Lawmakers from the main opposition People Power Party abstained from the ICT committee meeting Thursday amid concerns that the bill could spark tensions with the United States as it essentially targets U.S. companies Google and Apple.
The ruling Democratic Party lawmakers of the ICT committee pushed the bill forward on the back of the party’s majority status.
Apple expressed concerns over the legislative movement.
“The proposed Telecommunications Business Act will put users who purchase digital goods from other sources at risk of fraud, undermine their privacy protections, make it difficult to manage their purchases, and features like ‘Ask to Buy’ and ‘Parental Controls’ will become less effective,” Apple said in a statement.
“We believe user trust in App Store purchases will decrease as a result of this proposal.”
“We will continue to work with lawmakers and voice our concerns about the impact this bill will have for all users and developers.”
Google has argued that its Play store service fee is used to reinvest in its platform and the company ensures competition on its Android operating system by allowing alternative app markets, such as Samsung Electronics Co.’s Galaxy Store, to operate on the platform.
In a parliamentary audit in October last year, officials from Google Korea downplayed the impact the changes to its billing policy would have on local developers, saying less than 100 of them would be newly affected.
Google has made multiple attempts to appease global app developers amid growing backlash.
Last week, the tech giant decided to push back enforcing its new billing policy to the end of March next year for developers that request a delay.
The company has also lowered its Play store commission to 15 percent for the first $1 million app developers earn in revenue from the start of this month.
Apple, which has collected a 30 percent commission on in-app purchases on its App Store, has slashed its fee by half for developers that earn less than $1 million annually at the start of this year.
The latest legislative movement in South Korea adds to the pressure Google faces at home.
Earlier this month, 36 U.S. states filed a lawsuit against Google, alleging anti-competitive behavior in its Play store operations to collect and maintain its commission.