South Korea to curb Google and Apple dominance over commissions

SEOUL, Aug.24 (Reuters) – South Korea is likely to ban Alphabet Inc’s Google (GOOGL.O) and Apple Inc (AAPL.O) from charging software developers commissions on in-app purchases, the first of those big economy restrictions that could hurt the tech giants’ lucrative revenue streams.

Parliament’s legislative and judicial committee is expected to approve on Tuesday the amendment to the telecommunications law, dubbed the “anti-Google law”, prohibiting app store operators with dominant market positions from forcing certain payment systems .

If the bill gets committee approval, it will go to a final vote on Wednesday. South Korean lawmakers have started raising the issue of the tech giants’ committee structure since the middle of last year.

Apple and Google have both come under global criticism for requiring software developers using their app stores to use proprietary, integrated payment systems that charge commissions of up to 30% on in-app purchases. .

Last year, the European Union proposed the Digital Markets Act, targeting app store commissions. The rules are designed to affect large corporations, but some European lawmakers are in favor of tightening them to specifically target U.S. tech giants, Reuters reported in June.

Earlier this month in the United States, a bipartisan trio of senators introduced a bill that would curb app stores from companies they say exercise too much control over the market, including Apple and Google.

In South Korea, the home market of Android phone maker Samsung Electronics Co Ltd (005930.KS), Google Play Store achieved sales of nearly 6 trillion won ($ 5.29 billion) in 2019, according to a government report released last year.

Earlier this year, Google announced that it would reduce the service fee charged to developers on its app store from 30% to 15% on the first million dollars of revenue they earn in a year. Apple has taken similar steps.

For Apple, too, in-app purchase commissions are a key part of its $ 53.8 billion services business and a major expense for some app developers.

In May, an antitrust lawsuit filed by popular game maker “Fortnite” against Apple found that the game maker had paid Apple $ 100 million in commissions over two years.

Reporting by Heekyong Yang in Seoul, Additional reporting by Stephen Nellis in San Francisco Editing by Shri Navaratnam

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