Korean lawmakers have taken an important step to counter Google’s imposition of a commission on all in-app purchases by pushing a bill dubbed the “anti-Google law.”
A proposal to revise the Telecommunications Business Act was adopted on Tuesday by the Science, ICT, Broadcasting and Communications Commission and has been forwarded to the Law and Justice Commission.
The changes, already known as Google’s anti-monopoly law, would prohibit app stores from: enforcing certain billing systems; force application developers to save their work only on their platform; postpone the registration of an application; and remove content from the App Store without cause.
The amendment follows an outcry over changes to Google’s in-app billing system announced last November. The U.S. tech giant has said it will require all apps to use its billing system and charge a 30% commission on all in-app purchases. He previously insisted that mobile games use the Google Play payment system. This was to be extended to all applications from 2021.
In November, he delayed implementation from January until October last year and announced he would cut his commission to 15%. Google said it would continue to charge apps that make more than $ 1 million per year a 30% commission for revenue above the $ 1 million level.
App developers immediately protested the move as an abuse of Google’s dominance in the market. Almost all apps are downloaded through Google, and charging the extra fees paid off, they said, at their own expense and those of their users.
“What’s worse is that if they enforce the billing system, they could increase the commission rate at any time,” said an insider at a tech company who asked not to be identified. “Google’s imposition of an integrated pricing policy would increase the cost to consumers of digital content, leading to lower spending. This would ultimately shrink the content industry and make conditions worse for young creators. ”
According to a report from the Ministry of Science and ICT released last February, Google’s in-app commissions could cost Korean companies an additional 156.8 billion won ($ 136.4 million) this year, based on forecast in business revenue for 2021. Korean smartphone users totaled 7.5 trillion won in 2020.
Korean IT companies and related organizations hailed Tuesday’s legislative news as “tackling unfair trade that threatens fair play in the digital market,” according to joint statements from organizations released after Tuesday’s decision.
“We welcome the committee’s decision, which mitigates a great threat to the future of local start-ups and the content industry,” the Korea Start-up Forum said. “The law project would mean that the National Assembly rectifies criminal acts committed by application market providers to create an environment conducive to fair competition.
“The application of in-app purchases has been accused of being unfair around the world, including the United States and Europe, and this global consensus has reached the National Assembly,” said the president of Korea. Internet Corporations Association (K-Internet) Seong-ho Park.
“We hope that the remaining process [of lawmaking] is going well for the Korean content industry and young content providers to be properly protected.
The content industry, especially screenwriters and webtoonists, is strongly in favor of the new legislation. Korea’s digital content market is growing rapidly, but withdrawing such a large chunk of revenue could significantly hamper its momentum, the Korea Cartoonists Association and the Korea Webtoonists Association said in a joint statement.
“It is clear that Google’s integrated purchasing system would harm not only the creators of webtoons, but also consumers and platforms,” the associations said. “A company is clearly abusing its power to increase its fees to 30% for the use of its platform, for which there are hardly any alternatives. This would bring a major change to the webtoon ecosystem in Korea. ”
Google has not commented on developments in Korea, but Apple expressed dismay in a statement from its US headquarters. Apple didn’t announce any increase in its in-app commissions, but apps on Apple’s iOS App Store had no choice but to use Apple’s purchasing system in the first place.
Banning the in-app purchase system would mean a significant loss of revenue for Apple.
“Apple created the App Store to be a safe and reliable place for customers and a great business opportunity for developers,” said Apple. “The Telecommunications Business Bill will expose users who buy digital goods from other sources to the risk of fraud, undermine their privacy, make it difficult to manage their purchases and features such as” Ask to buy ”and“ Parental controls will become less effective. . ”
Since last year, seven different teams of National Assembly representatives have presented their own versions of the anti-Google law to the National Assembly. The details of each invoice differed, but shared the common goal of preventing Google from applying its in-app purchasing system to all apps.
The Legislation and Judiciary Commission will decide whether the bill is submitted to a vote in plenary session. This month’s legislative committee meeting is scheduled for Thursday. But bills usually enter a premeditated 5-day period before being considered by the committee. It is therefore not known whether it will be discussed on Thursday or voted on during a plenary session on July 23.
“We will discuss with the party leaders whether or not to end the 5-day premeditation period,” said Democratic Party representative Jo Seoung-lae, a member of the scientific committee. The 5-day technicality can be ignored for “urgent and unavoidable reasons” and the members of the DP outnumber the members of the opposition PPP in the legislation committee.
If passed this month, the law will take effect after 15 days. The new in-app payment system is slated to kick off in October, with a few exceptions for some developers who have gotten extensions from Google until next April.
Concerns have arisen that the bill could be seen as unfair regulation of certain businesses. Members of the People Power Party (PPP) scientific committee argued that it might go against the Korea-United States Free Trade Agreement (FTA) to have regulations targeting specific companies.
The counter-argument is that the amendment should not be seen as targeting specific companies – Google or Apple – but as preventing companies from charging unfair fees, which is why it would not go against the FTA, a K-Internet spokesperson said. Google is already facing legal action from 37 U.S. states over enforcing its in-app billing system, the spokesperson said, and Korea is taking it one step further by passing legislation.
“Many countries don’t have alternative app markets like we do with One Store or Galaxy Store,” said Kwon Se-hwa, general manager of K-Internet’s policy office. “Apple is already facing legal action from Epic Games in the United States for enforcing an in-app payment system and Google is now facing the same situation. Korea is the third largest mobile application market in the world, so it is significant that we are taking these steps against a monopoly.
BY YOON SO-YEON [yoon.soy[email protected]]