Tencent technology news on September 1, the South Korean parliament voted to pass the amendment to the electronic communication industry law on Tuesday. After the bill comes into effect, South Korea will become the first country in the world to restrict the withdrawal of technology giants such as Google and apple from app stores.
Despite the lobbying of American technology giants, the South Korean Congress passed the bill known as the “anti Google law” on Tuesday. Once the president of South Korea signed the moon Jae in Yin, it will become law. The law prohibits Google, apple and other app store operators from requiring users to use their own apps to pay for apps.
It also prohibits the app store from delaying approval of apps or “improperly” removing them from the app store, and prohibits the app store from insisting on exclusivity with app developers. If they do not comply, app stores in Korea may be fined up to 3% of their revenue.
All along, apple and Google charge up to 30% of the value-added services in the application, which is also known as “Apple tax”. With increasing concerns about Apple’s and Google’s monopoly in app publishing, the South Korean legislation may be closely watched by other regulators around the world. The bill was approved on Tuesday, which means that developers will be able to avoid paying commissions to major app store operators such as Google and apple by guiding users to pay through alternative platforms.
The amendment to Korea’s electronic communication industry law initially included other measures, which were taken after the review of the judicial committee, such as prohibiting app stores from forcing developers to register works only on their platforms, because the Korea Fair Trade Commission already has similar provisions. The bill is one of the biggest problems in the IT industry this year. This is a proposal to protect local application developers put forward by representatives of the South Korean parliament after Google announced in July last year that it would charge 30% of all in app payments. Google’s new in app payment system is scheduled to take effect in October. The bill will make Google’s adjustment impossible to implement in South Korea. According to a report released by South Korean officials in February, without this bill, Google’s new policy will cost South Korean companies an additional 156.8 billion won (about 136 million US dollars) a year.
Park Seong Ho, chairman of the k-internet Association of Korean Internet enterprises, said: “we hope that the amendment to the electronic communication business law will create a fair application ecosystem. In this ecosystem, the rights of creators and developers are guaranteed, and users can obtain diversified content at a cheaper price. ” On the issue of intra application payment, k-internet has always been one of the organizations with the highest voice.
The impact of the amendment to Korea’s electronic communications law is not limited to applications worth $142 billion. The confrontation has hit not only apple and Google, but also Amazon and Facebook’s basic role as new gatekeepers of the digital economy. Over the past decade, all four companies have established huge online markets in which competitors can do business.
South Korea is currently one of the few countries in the world where local Internet companies such as naver and kakao dominate. But their business is also threatened: YouTube, for example, replaced naver as South Korea’s largest video service this year. South Korean lawmakers now echo their American counterparts, saying the lack of competition has left consumers and developers affected by apple and Google. In India, the founders of start-ups are particularly outspoken in saying they want to shut the two companies out.
Apple and Google’s response
Apple has always required all apps to use their own in app payment system and extract a commission of 15% to 30% from total sales. After facing the lawsuit of application developers for monopolizing IOS application publishing and in app payment, apple said on August 26 that it would allow application developers to send e-mail to their users to inform them of alternative purchase options. However, apple does not provide in app notification.
With regard to the amendment to the electronic communications industry law voted by the South Korean parliament on Tuesday, an apple spokesman said that the bill will “expose users who buy digital goods from other sources to the risk of fraud, undermine their privacy protection, make it difficult for them to manage their purchase behavior, and the functions of ‘request purchase’ and ‘parental control’ will become less effective.” The spokesman added that due to the legislation, users’ trust in app store purchases may be reduced.
A Google spokesman said that just as application developers need costs to make applications, Google also needs costs to maintain the operating system, establish and manage the application market. Charging revenue sharing “helps to keep Android free and provide developers with tools and global platforms to reach billions of consumers around the world. We will reflect on how to comply with this law while maintaining a model that supports high-quality operating systems and app stores. We will share more in the coming weeks. ”
Application Developer Support
Epic Games, the developer of the popular game fortress night, established its own in-game payment system last year as part of an effort to circumvent apple and Google policies. When the law was passed, Apple was waiting for a ruling on the landmark lawsuit against Epic Games. The game was removed from the app store after deliberately bypassing Apple’s payment system. In the face of increasing legal and regulatory pressure due to suspected anti competitive behavior, apple relaxed restrictions last week, allowing some applications to promote cheaper alternatives outside the in app payment mechanism.
Tim Sweeney, CEO of Epic Games, who is suing Google and apple for alleged anti competitive behavior, said the passage of the law was “a major milestone in the 45 year history of personal computing.”
Several other companies, including spotify and tinder owner match, have said in recent years that technology giants should let them use their own payment systems. Match spokesman said in a statement on Tuesday: “the historic action and bold leadership of South Korean legislators today marks a milestone step in the struggle for the equitable application of the ecosystem. We look forward to the speedy signing of the bill into law and appeal to legislatures around the world to take similar measures to protect their citizens and enterprises from the monopoly gatekeepers who restrict the Internet. ”
David heinemeier Hansson, chief technology officer of Basecamp, said the bill was “the first real big crack in the dam of monopolized app stores.” Hansen played an important role in trying to pass similar legislation in Arizona and North Dakota, but failed. He said he hoped South Korea would become a catalyst for other countries to take action. “South Korea will show the world that the world will not fall, and all Apple’s arguments will be refuted by reality,” he said
Spotify also welcomed the adoption of the amendment to the electronic communications law on Tuesday. The company said: “the app store in app payment act in Korea is a popular legislative achievement, indicating that the global regulatory and legislative momentum continues to curb Apple’s abuse in the app store. The time has come to end Apple’s monopoly on in app payment. We commend the South Korean government for its leadership in removing barriers to innovation and competition for developers and returning power to consumers. ”
Global regulatory survey
Daniel ives, managing director of stock research at wedbush securities, a brokerage, said that global regulators are increasingly concerned about the app stores and fees charged by Google and apple to developers – the ruling in South Korea may be the first step to strengthen the review.
“This is a potential watershed moment,” Ives said before making a decision in Seoul on Monday“ Not necessarily because of what this means in itself, but because of the chain reaction, because it shows that they are not just words, but practical actions. ” Ives added that although there may be monetization opportunities for others, such as telecom service providers, it ultimately depends on how consumers respond“ The question is, what will consumers eventually do? Because the path with the least resistance is through apple and Google – which consumers are used to, “he said.
For apple and Google, the app store has become a very profitable business, so any action by global regulators to weaken their position as gatekeepers of the mobile application economy may have a significant impact on their performance.
The lawsuit filed by several U.S. attorneys general against Google was disclosed last weekend. The information disclosed in the lawsuit shows that the company obtained $11.2 billion in revenue and $7 billion in operating revenue from the play store in 2019, including in app payment and in market advertising. This shows that in 2019, the play store accounted for 20% of the operating revenue of alphabet, although it contributed less than 10% of the total revenue of Google’s parent company. Pending bills in the European Union and the U.S. Senate seek to ban app store commissions, while the European Union and the United States have taken antitrust enforcement actions against apple and Google respectively for charging application developers.
Wi Jong Hyun, a professor of business strategy at Chung ang University in South Korea, said that South Korean Law “will become an important precedent for the United States and European countries to strengthen the prevention of apple and Google. In particular, European countries that dislike American technology companies are likely to introduce similar bills or put pressure on them. “（ Tencent Technology (compiled / Mowgli)