How South Korea's 'Anti-Google law' will hit Google, Apple in-app payments and what it means

South Korea has approved a landmark law, dubbed as 'anti-Google law', which fundamentally changes the way in which tech giants including Google and Apple operate their app stores, that is, Google Play Store and App Store, in the country. While the law has been nicknamed as the ‘anti-Google law’ after the search giant, it will prevent both Apple and Google -- the two companies that operate the largest app stores on the internet -- from forcing developers to use their in-app payment systems when developing apps for their app stores.

What is 'anti-Google law'? Since August 2020, MPs in South Korea have proposed a bill to restrict tech companies like Google and Apple from establishing their dominance in the app payment market in the country - virtual monopolies. Then earlier this week, the South Korean lawmakers passed a bill revising the country’s Telecommunication Business Act. This effectively declared their respective monopolies within the country illegal.

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How anti-Google law will hit Google Play Store, Apple App Store: This new law restricts tech giants including Apple and Google from charging app developers in the country commission on in-app purchases within their App Store and Play Store respectively. It will have a massive impact on revenues of these stores, which are virtual money-making machines for both these companies.

Massive global fallout from 'anti-Google law' expected: The bill was approved unanimously by 180 votes to nil in the South Korean National Assembly, making South Korea the first country to pass a piece of legislation on the issue. This legislation could very well set a precedent for countries around the world to pass similar laws effectively breaking Apple and Google’s monopoly in their respective app stores as far as in-app payment-related commissions are concerned.

Apple reacted with this announcement, “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.” It was reported by TechCrunch.

Google, Apple U-turns came too late: Notably, Google, back in March 2021, announced that it was reducing its 30% commission that it charged from all Android developers from around the world on the first $1 million that they make each year to 15%. It followed Apple’s move of charging 15% percent commission from the App Store developers starting from January 1 this year under the App Store Small Business Program.