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South Korea to put a brake on Google and Apple on commission collection

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South Korea will likely prevent Google and Apple from requiring software developers to use their payment systems, effectively preventing them from charging commissions on in-app purchases, the first brake on tech giants for big savings.

Legislation from the parliament and the judiciary committee is expected on Tuesday to approve the revision of the Telecommunications Business Law, dubbed the “anti-Google law,” which targets app store operators with dominant market positions.

If the project is approved by the committee, it will be submitted to a final vote on Wednesday. South Korean lawmakers have pushed the committee structure issue since the middle of last year.

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Both companies faced global criticism for requiring software developers who use their app stores to use their in-app payment systems that charge commissions of up to 30% on in-app purchases.

“For gaming apps, Google has forced app developers to use its own payment system … and wants to expand its policy to other apps like music or webtoon,” said Kwon Se-hwa, general manager of the Korea Internet Corporations Association, a non-profit group representing Korean IT companies.

“If the new bill becomes law, developers will have options to use other independent payment systems,” Kwon said.

The European Union last year proposed the Digital Markets Act, targeting app store commissions. The rules are designed to affect big companies, but some European lawmakers favor tightening them to specifically target American tech giants, Reuters reported in June.

Earlier this month in the United States, a bipartisan trio of senators introduced a bill that would control the app stores of companies they say wield a lot of market control, including Apple and Google.

In South Korea, the home market of Android phone maker Samsung, the Google Play Store earned nearly 6 trillion won ($5.29 billion) in 2019 in 2019, according to a government report published last year .

Earlier this year, Google said it would reduce the service fee it charges developers in its app store from 30% to 15% on the first million dollars they earn in revenue in a year. Apple took similar steps.

For Apple as well, in-app purchase commissions are an important part of its $53.8 billion services business and are a big expense for some app developers.

In May, an antitrust lawsuit brought by the maker of the popular game “Fortnite” against Apple revealed that the game maker had paid Apple $100 million in commission over two years.

Source: Reuters

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