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South Korea’s new ‘Anti-Google Law’ – Explained

7 min read

By Stuti Hasmukh Oswal

Published on: September 6, 2021 at 19:21 IST

Introduction

Recently, everyone has been talking about “Anti-Google Law” which has also put Apple into trouble. In order to understand what Anti-Google Law is it is important to first understand a terms like in-app purchase and exactly what they hold monopoly in and why is such a law being brought in.

Google and Apple have been under the fire in many countries over different issues, but South Korea is the first country to actually try and curb the monopoly these tow companies have over the world economy.

Meaning of In-App Purchase

The meaning of the term in-app purchase is that when a person buys a product of service built in the app. For example, if it is a gaming application wherein the gamer wants to purchase more coins with actual money, he will proceed with the payment for the same. Such a purchase will be called an in-app purchase.

So, for example, if anyone wants to make a purchase on their favorite game, they have to go through these App stores to make the purchase. There is no other medium or mode of payment available for making a purchase on a game or an app.

In India, if a person has to make a purchase on an app they are immediately showed the payment gateway of Google Play Store or Apple App Store, if we do not wish to make the payment there, we can make a case payment on of the Cafe Coffee Day outlet around us.

Background

When an app developer builds an application, it uploads it with the Google Play store as well as the Apple Play store by complying to their various terms and conditions. The same becomes available for us users to download this application in order to use them. These applications have various features, products or services available for monetary considerations.

When any user wishes to avail these features, products or services it will have to make a payment towards the same. While making this payment they have to go through the Google Play store or Apply Play store payment process. There was no other option for an app developer other than these two to receive payments.

This practice was quite unfair for other App stores. Since they were not given the same opportunity, a monopoly was being established by the Google Play store and Apple Play store.

Changes brought in by South Korea

The country of South Korea is the first country to bring in the Anti-Google Law. The country noticed the exploitation done by the companies like Apple and Google and decided to put an end to the same. It was import for other Play store to receive a fair chance in the business.

The country’s National Assembly on 31st August, 2021 passed an amendment to the Telecommunications Business Act which is being called with another name “Anti-Google Law”. This was a landmark decision made by the country and it also sets a precedent for others. The said amendment was brought in by 180 votes in favor out of the total 188 votes.

Features of the new Amendment

  • Remove Google and Apple from a dominant position.
  • Reduces the fee chargeable by the App stores for in app purchase.
  • Established fair play and removes monopoly.
  • Provides an entry for other players in the market.
  • Removes mandatory polices imposed by the App stores upon listing application on their App store.

Reasons for bringing in such a law

The companies like Google and Apple had made it mandatory for all the Application that are there on the App store to mandatory to use their payment system and give them commission on the same. They would charge a commission fee up to 30% which was completely unfair. Every Application listed on the App Store compulsorily had to follow the said policy.

The App stores would also incorrectly delay the reviews and delete mobile content from the app market. The new amendment has put a ban on all unfair practices followed by the App stores.

Since Google and Apple were enjoying the monopoly the prices of the products and services offered were quite high. Some of the users could not afford the same. The amended act will ensure that the prices of these services and products are regulated and affordable.

Effects

The App Stores like Google and Apple gain fastest revenue by implementing mandatory payment system on the apps and it provides as a profiting platform in such app ecosystem.

Many countries as well are trying to implement such laws and policies to such mandatory in app purchase policies of Google and Apple

The businesses of Google and Apple app store is struck down than before due to the implementation of such ban, rules and regulation imposed by South Korea. Google has further given a statement saying, “the company would reflect on how to comply with this law while maintaining a model that supports a high-quality operation system and app stores.”

It further added that “Google Play provides far more than payment processing, and out service fee help keep Android free, giving developers the tools and global platform to access billions of consumers around the world. It’s a model that keeps device costs low for consumers and enables both platforms and developers to succeed financially and just as it costs developers money to build an app, it costs us money to build and maintain an operating system and app store.”

Apple as well gave a statement saying that “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.”

Many other companies and app developers have given a positive review to the said amendment. Each have a view that this will change the face of App ecosystem and bring in healthier, fair and equal opportunity for everyone in the industry.

One of person from Match Group who owns famous dating applications known as Tinder has said that “Today’s historic action and bold leadership by the South Korean lawmakers mark a monumental step in the fight for a fair app ecosystem. The legislation passed today by the Assembly will put an end to mandatory in—app purchase in South Korea, which will allow innovation, consumer choice and competition to thrive in this market.”

More issues faced by the companies  

The Apple Store prior to the said amendment was in a class action suit in US wherein it was willing to settle the suit by paying a $100 million and changing its policies wherein it gives the app developers an option to communicate with its users via email and provide them options to make any payment. Apple has not been able to provide what the developers are actually asking for which is an alternative payment system and a way to communicate this to the users from within the app.

Prior to the Act, Google in the month of March 2021 had announced that it will reduce the commission fee charged by them to 15% from 30%. This reduction was only for the app developers which are earning their First one million USD. Which means that the rate of commission will be 15% on the First $1Million earned by the app developers and then after the said limit is crossed the early rate that is 30% will be applicable. 

The Alliance of Digital India Foundation (ADIF) had also frequently raised issue of Google and Apple’s mandatory using of built in payment system of the App store and charging a fee of up to 30 for it. The ADIF has welcomed South Korea’s decision with open arms.

The Executive Director of ADIF gave a statement that “Any legislation on the matter anywhere in the world will set a precedent for other nations to adopt and build on, and we hope this will now expedite similar legislation by other governments as well. The matter has always been about the anti-competitive practices of forcing a payment option as well as of forcing out other payment providers. We exhort the Apples and Googles of the world to uphold the spirit of the legislation and adopt fairer policies going forward. Unfair markets and anti-competitive practices stifle innovation and adversely impact market outcomes in the long run.”

Conclusion

The companies like Google and Apple have been under observation for quite some time now for various things. Every country has been keeping their eyes on Google and Apple’s activity to make sure nothing illegal has been done which is not in the interest of the people. The CCI has also received various complaints against Google and Apple’s anti-competitive practices.

South Korea has set a precedent for other countries whose app ecosystem is suffering to take a step and do the similar thing. It is unfair on the part of other App store to not get equal opportunity in the app market. After South Korea many countries are too planning to bring in the above changes in order to help the app developers in the country as well as their users.

This amendment will bring a whole new aspect to the app ecosystem and encourage a healthier competition in the app market. No consumer shall be deprived of their rights. This amendment will provide the customers a right to choose and protect their interest.

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