South Korea investigates Apple and Google over new in-app payment law

Technology

Governments around the globe are increasing pressure on Apple and Google to open up their mobile in-app payment rules. This week, South Korea is trying to demonstrate that its new “anti-Google” law has teeth by investigating both companies.

On Tuesday, the Korea Communications Commission (KCC) announced it is investigating Apple, Google, and the local One Store, for allegedly violating its app payment processor law. The South Korean regulator could charge the companies up to two percent of their average annual revenue.

Last summer, South Korea passed an “anti-Google” law which says app store regulators like Apple and Google can’t force customers to use their in-app payment processors, from which they take sales cuts. Specifically, it bars the companies from unfairly delaying or refusing the review, registration, renewal, or inspection of mobile software that uses third-party payment processors.

Both platform holders have since technically complied with the new regulations but with strings attached. Apple warns that South Korean users who use third-party payment portals won’t have the same customer guarantees Apple provides. The company also restricts features like Family Sharing and Ask to Buy parental controls to its payment processor.

Furthermore, Google and Apple still take a cut from third-party payments, albeit a reduced one. Apple’s commission falls from 30 to 26 percent, while Google’s decreases from 15 to 12 percent.

Google’s commission has led to higher in-app purchase prices on Android apps in South Korea compared to other platforms. The KCC announced an investigation into Google’s current policy in June, but now we know that investigation includes Apple and One Store — a Korean Android app platform. It remains to be seen whether fines can encourage the two mobile giants to alter their rules further.

The European Union’s new Digital Markets Act includes a rule similar to the South Korean legislation. In response, Google made the same concessions in the EU as in South Korea, though only for non-gaming apps. Google is readying separate new rules for guidelines this fall.

However, Google still imposes its payment processor on Play Store apps in other regions. In a legal battle, Epic Games forced the company to temporarily rescind its threat to delist Epic’s newest acquisition, Bandcamp.