05/04/2022, 17.37
SOUTH KOREA
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Google trying to get around anti-digital oligopoly law

by Guido Alberto Casanova

Approved last summer, the legislation seeks to force tech giants to allow its app customers to access third-party payment systems. However, Google has announced that as of 1 June it will remove apps that outlink to non-Google payment systems.

 

Seoul (AsiaNews) – South Korea’s so-called anti-google law was front-page news in August and September 2021 and set the digital world abuzz.

The legislation, which amended an existing law, came with unprecedented restrictions that many expected would entail greater regulatory scrutiny over the excessive power of app markets operators. Eight months late, the early enthusiasm seems to have died down.

The amendments sought to regulate the payment system for all in-app purchases. Until then, Google (via Android) and Apple – which dominate the South Korean app market – forced developers to rely on Google Pay or Apple Pay for purchases within the app.

The two US giants’ digital payment apps had very high costs for this kind of services, with commissions as high as 30 per cent.

The reform was meant to restore competition in the digital app market, which had been severely undermined by the Google and Apple duopoly.

The legislation approved by the South Korean parliament sought to break the vicious circle between app stores and the digital payment systems owned by Google and Apple:

Under the amendments, no single payment system can be required and developers who use alternative systems cannot be penalised.

South Korean lawmakers intended to re-establish free market principles, allowing users to choose among many digital payment systems.

For a while, it seemed that South Korea had the upper hand, as Google announced in November that it would allow downloadable apps from its app store to rely on third-party payment systems. Nonetheless, the tech giant found a way to circumvent some elements of the law.

On 1 April in fact, Google adopted a new policy on digital purchases: apps will be able to offer Google Pay or another in-app payment system, but will not be allowed “outlink”, i.e., give an in-app link to an external website to purchase digital goods under penalty of removal from the app store, starting 1 June.

For the Korea Communications Commission (KCC), if Google actually removes any apps from its app store for violating company policy, it would be breaking the law. In a meeting with Google, the KCC warned that it would take action.

However, in the absence of government guidelines, South Korean authorities will have a hard time asserting their point of view. In fact, last year's changes simply require operators not impose a single payment system. Technically Google now allows a third-party purchase system in lieu of Google Pay.

The tug-of-war between the tech giant and the South Korean authorities is set to intensify as the June 1 date approaches, after which Google plans to enforce its own policy of removing non-compliant apps.

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