Anti-Google Law in Korea – A Complete Breakdown

The Anti-Google Law or officially called the Telecommunication Business Act was passed on August 31st of 2021 by the National Assembly in South Korea. The law was passed by a vote of 180 to 0 with 8 abstained votes. The law will prevent Google as well as Apple from forcing developers to use their in-app billing systems when building apps for their two market-dominating app stores (Google Play and Apple Store). Therefore, app users in Korea will now be allowed to use the payment system of their choice. In addition, app operators in Korea will not be required to pay the app market operators commissions.

Smartphone users download apps to access different services. Many of these apps can be purchased on app stores such as Google Play or Apple’s App Store. Google is the clear leader in Korea as they hold a 71% market share. Apple’s App Store comes in second at 10.6%. Therefore, combined they control over 80% of the app market in Korea. All in-app purchases must go through the app operators who charge a commission.

Telecommunication Business Act – Anti-Google Law

The Anti-Google Law went into effect in October of 2021.  This legislation targets major tech companies, particularly Google, in an effort to address concerns regarding their dominance and potential anti-competitive practices.

There has been growing criticism over the rules Google and Apple set for how 3rd-party apps. The main issue deals with their app stores charging for services. The passing of this law will be the first time in the world that a government has stepped in to prevent Google and Apple from implementing their own payment rails on in-app purchases. However, similar talks are underway in Australia, Europe, and Japan. It is estimated that the bill will save Korean companies around $140 million a year according to the Ministry of Science and ICT. 

“The proposed Telecommunications Business Act will put users who purchase digital goods from other sources at risk of fraud, undermine their privacy protections, make it difficult to manage their purchases, and features like ‘Ask to Buy’ and Parental Controls will become less effective,” Apple said in a statement. 

What the Anti-Google Law Means for App Developers in Korea

Independent app developers in Korea were paying a 30% fee for in-app payment processing. Therefore, for every transaction, whether it be a continuous subscription purchase or a one-time payment by users, Google and Apple got 30% leaving the rest to the developers. Google and Apple stated that these commissions were necessary in order to maintain the high quality of the platform (app stores).

Since Google and Apple are the main players in the mobile app market. Therefore, independent app developers have nowhere else to go. The law is an attempt to create a fair market environment for developers. Now app developers in Korea will be able to charge their users directly without having to go through Google and Apple’s in-app payment system. 

What the Anti-Google Law Means for App Purchasers in Korea

Due to the fact that Google and Apple hold over 80% of the market. App developers had no choice but to pay the 30% commission in the past. These extra fees were added to the consumers. The law could lower prices for apps overall in Korea. In addition, consumers will have a lot more choices in how they want to pay for a particular app. Moreover, the legislation seeks to ensure that tech companies obtain proper consent from users regarding the collection and use of their personal information. By placing stricter regulations on data handling practices, the law aims to safeguard user privacy and grant individuals greater control over their online data.

While Naver is the top search engine in South Korea, Google in Korea is on the rise. Google has created over 50,000 jobs in Korea. As well as, many business opportunities once entering Korea despite having many sanctions placed on them by the Korean government. In addition, Google has provided platforms such as AI technology and apps, mobile, and cloud computing services. These services have helped support measures to foster startups in Korea. Google has also established Google Startup Campus to help Korean startups, partners, and creators enter the global market. 

“Through the startup campus, new Korean businesses are actively interacting with communities around the world and paving the way for innovation. The Google Startup Campus Team and the Google Developer Ecosystem Team plan to launch a startup support program called the Google for Startup Accelerator program soon,” said Kim Kyoung-hoon, country director of Google Korea. 

The Anti-Google Law in South Korea also has the potential to reshape the search engine market by encouraging competition and diversification. Under this legislation, dominant search engine providers, like Google, are required to provide more transparency and open up their application programming interfaces (APIs) to other platforms. This move allows new entrants and local search engines to access valuable data and compete on a more level playing field.

Balancing Tech Giants and Content Creators

The Anti-Google Law also tackles the issue of fair compensation for content creators. It mandates that tech platforms negotiate with news publishers and other content providers for the use of their material. This provision aims to address the long-standing concern of digital platforms benefiting from the work of others without adequate remuneration. By enforcing fairer negotiations, the law intends to promote a more equitable digital ecosystem.

The introduction of the Anti-Google Law has garnered attention globally, with discussions surrounding the potential for similar legislation in other countries. While some countries have expressed interest in pursuing comparable measures to tackle tech giants’ market dominance, others have voiced concerns regarding potential trade implications and restrictions on innovation. The impact of South Korea’s legislation is likely to influence future debates on regulating big tech companies worldwide.