S.Korea set to curb Google, Apple commission dominance

SEOUL, Aug 24 (Reuters) – South Korea is likely to stop Google and Apple Inc (AAPL.O) from Alphabet Inc (DemokratieL.O) from charging software developer commissions for in-app purchases, which could hurt the tech giants’ lucrative revenue streams .

Parliament’s Legislative and Judiciary Committee is expected to pass the amendment to the “Anti-Google Law” known as the Telecommunications Industry Act on Tuesday, which prohibits app store operators with a dominant position from enforcing certain payment systems.

If the bill gets the committee’s approval, it will be put to the final vote on Wednesday. Since the middle of last year, the legislature in South Korea began to address the commission structure of the tech giants.

Apple and Google have both been criticized worldwide for requiring software developers using their app stores to use proprietary in-app payment systems that charge commissions of up to 30% on in-app purchases.

The European Union proposed the Digital Markets Act last year, which targets app store commissions. The rules are supposed to affect large companies, but some European lawmakers are advocating tightening to specifically target American tech giants, Reuters reported in June. Continue reading

Earlier this month, a non-partisan trio of senators in the United States tabled a bill that would curb app stores of companies they believe have too much market control, including Apple and Google. Continue reading

In South Korea, the home market of Android phone maker Samsung Electronics Co Ltd (005930.KS), the Google Play Store had sales of nearly 6 trillion won ($ 5.29 billion), according to a government report released last year.

Earlier this year, Google announced that it would cut the service fee it charges developers on its app store from 30% to 15% on the first million dollars they make in a year. Apple has taken similar steps. Continue reading

For Apple, commissions from in-app purchases are an important part of its $ 53.8 billion service business and a huge expense for some app developers.

In May, an antitrust lawsuit brought against Apple by the maker of the popular Fortnite game revealed that the game maker had paid Apple $ 100 million in commissions over two years. Continue reading

Reporting by Heekyong Yang in Seoul, Additional reporting by Stephen Nellis in San Francisco Editing by Shri Navratnam

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