South Korea passes bill to ban payment dominance by Apple, Google

By Ishika Dangayach, 2:00 PM ET

South Korea's parliament has adopted legislation that wouldmake it the first country to put restrictions on Google and Apple's payment practices, which require developers to utilize the tech giants' proprietarybilling systems.

Apple and Google's policies often compel developers to paythe tech behemoths a fee of up to 30% on each transaction.

The legislation, which was adopted on Tuesday, implies thatdevelopers will be able to avoid paying commissions to big app store operatorssuch as Google and Apple by sending customers to other payment channels.

This attempt to disrupt the big tech hegemony over howdevelopers sell digital products within their applications on theirmarketplaces. The measure is the world's first of its type, amending SouthKorea's Telecommunications Business Act to prohibit big app market operatorsfrom mandating the usage of their in-app purchase systems.

According to Yonhap News, the bill, known colloquially asthe Anti-Google Law, was introduced in parliament in August.

It is intended to prevent app store owners in strongpositions from imposing payment schemes on app creators and “inappropriately”delaying app evaluations or blocking apps, Reuters reported

The bill also empowers the South Korean government toresolve disputes over payment, cancellations, and refunds in the app market,according to reports.

If Apple and Google fail to comply with this regulation, theSouth Korean Communications Commission, the country's media regulator, wouldpenalize them 3% of their total revenue in South Korea.

According to Reuters, 180 of the legislators in attendancevoted in support of approving the modification to the TelecommunicationsBusiness Act.

The National Assembly's legislative and justice committeesapproved amendments to a law aimed at prohibiting app store owners fromcompelling developers to adopt certain payment methods, according to mediareports last week.

The South Korean legislation is a result of Google'sstatement last year that it will begin enforcing the charging system on alldevelopers on the Play Store in October of this year.

Apple agreed on Thursday to relax App Store rules for small developers, letting them other promote payment methods  than Apple's paymentsystem.

Earlier this month, A new bipartisan bill was introduced to bring more competition to the smartphone app store market currently dominated by Apple and  Google and said the duo has too much market control.

With inputs from CNBC