A year has passed since South Korea enacted a law requiring Apple and Google to allow access to third-party billing systems for app payments, but critics say it has done little to change the US tech giants’ dominance.
The country amended its Telecommunications Business Act in March 2022 to ban app store operators from forcing developers to use specific payment methods. Google and Apple required the use of their own payment system, from which they receive a 30% commission.
Lawmakers said the practice was an abuse of the companies’ dominant market shares. The law’s aim was to lower fees for domestic app makers by allowing other payment methods.
Google and Apple both said they would comply with the law and open payment systems to third parties, but the two companies later imposed a separate 26% fee on app makers when using external payments.
“If we use third-party payment systems, we get hit with even higher fees than with Apple and Google. In the end, nothing changed,” said an app company executive.
In addition to the 26% commission paid to Apple and Google, app developers are charged fees by external payment processors and credit card companies. The result is a payment burden similar to what came before the new law. Few app makers have switched.
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South Korea is home to mobile game makers with global reaches, such as Krafton and Netmarble, as well as local tech champions like Naver and Kakao. Having the profits of these companies siphoned off by U.S. tech giants has long been a source of frustration.
South Korean ruling party lawmaker Kim Yeung-shik has said Google earned KRW 410 billion (USD 310 million) in commissions in South Korea in 2022 alone. Kim has called for further revision of the law, saying the changes failed to achieve their goal.
Song Kyong-jae, a professor at South Korea’s Sangji University, said: “Even if one country applies a net of laws, there are many ways to circumvent it. App payments are a global domain, and legislation must be developed through international cooperation and discussion.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.