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SEOUL (Reuters) – Apple Inc (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL)’s Google are not doing enough to comply with South Korea’s law barring dominant app store operators from making app developers use only their proprietary payment systems, a lawmaker who spearheaded the amendment told Reuters.
South Korea, the first country to impose legislation curbing the tech companies’ payment policies, is expected to make public the initial details of what it takes to comply with the law on Wednesday, an official at the Korea Communications Commission (KCC) said.
South Korea amended the Telecommunication Business Act in August to try to curb the tech majors’ market dominance and stop the big app store operators charging commissions on in-app purchases.
The law went into effect in September but details of what would constitute compliance are being drafted by the KCC in an enforcement ordinance.
Apple had told the South Korean government that it was already complying and did not need to change its app store policy https://www.reuters.com/technology/skorea-targets-apple-over-new-app-store-regulation-2021-10-15, while Google said it plans to allow third-party payment systems in South Korea https://www.reuters.com/technology/google-plans-allow-third-party-payments-systems-skorea-2021-11-04, but will only reduce its service fee charge to developers by 4 percentage points when users choose an alternative billing system.
The tech companies charge developers as much as 30% of their sales in in-app transactions.
“Frankly, we are not satisfied,” lawmaker Jo Seoung-lae who spearheaded the amendment said.
“Excessive fees take away developers’ chances for innovation … parliament is to be closely informed as the government drafts detailed regulations to make sure there is accountability,” Jo said.
Apple and Google did not immediately respond to requests for comment.
The KCC is drafting “finely woven” regulatory details for the ordinance that will be reported to a parliamentary committee on Wednesday and put into practice by March next year, KCC Vice Chairman Kim Hyun told a conference on app ecosystem fairness on Tuesday.
“This is the first legislation worldwide with the chance to transform the market from a duopoly with Apple and Google,” Epic Games CEO Tim Sweeney told Reuters.
However, it is not clear how compliance will be enforced nor what the penalties will be if the rules are breached.
An early draft of the enforcement ordinance seen by Reuters details a fine of up to “2% of revenue” as penalty for an infraction of the law by app market operators.
