Google and Apple Faces Huge Test In South Korea

South Korea is expected to become the first country to pass a law ending Apple and Google’s domination of payments on their mobile platforms, setting a potentially radical precedent for their lucrative app store operations everywhere from India to the U.S.

Apple Inc. and Alphabet Inc.’s Google, the effective duopoly controlling most of the world’s smartphones, face a raft of legislative measures in the U.S. rebuking their “gatekeeper control” and urging a curb on their power to dictate terms on app marketplaces. Both charge a fee of typically 30% on purchases made through their stores and exclude alternative payment handlers, arguing this protects users from fraud and privacy invasion.

Now, Korea’s government is taking direct action to end that dominance. The Telecommunications Business Act would mandate giving users a free choice of app payment providers. The bill, which is almost certain to pass an assembly vote Monday given the ruling party’s super-majority, opens the door for companies like Fortnite maker Epic Games Inc. to transact directly with users and bypass the platform owner’s charges. Epic has taken the iOS and Android owners to court in various jurisdictions arguing their fees are unfair.

“This could presage similar actions elsewhere,” said Omdia analyst Guillermo Escofet, who specializes in digital consumer platforms. “Regulators, lawmakers and litigators in North America and Europe are also scrutinizing app-store billing rules, and the overriding political mood has become hostile to the enormous amount of power concentrated in the hands of the tech giants.”

Korean lawmakers are making their move ahead of plans by Google to introduce its 30% commission fee in October, reversing a years-long exemption for the country. Its announcement last year it would make its payment system mandatory for non-gaming apps is widely seen as the trigger for the new legislation — dubbed locally the anti-Google law.