Article South Korea: Amended Telecommunications Business Act Will Ban App Payment Monopolies

On August 31, 2021, the South Korean National Assembly amended the Telecommunications Business Act in order to bar app market operators from forcing certain payment systems on mobile app development companies. The amendment will take effect immediately after promulgation. Application providers will have the choice to use other payment systems.

Background to the Amendments

App developers have been raising concerns about “the onerous, and arbitrary terms and conditions that govern the Apple App Store in particular.” Their complaints over the excessive fees charged made them file formal complaints to regulators and lawsuits.

Apple had been mandating all app providers to use its own billing system and had been taking 15% to 30% commissions from gross sales. Google announced in September 2020 that it would enforce the use of its billing system on all app providers in its Play Store starting October 2021. Its proprietary payment system charges fees of up to 30% when users purchase digital goods within apps.

In July 2021, Google announced that application providers “will be able to submit a formal request for an extension [for compliance with the billing system] that will be evaluated on an app-by-app basis with a latest possible date of compliance of March 31, 2022.”

As part of a proposed lawsuit settlement with app providers, Apple announced on August 26, 2021, that it would let app providers tell its iPhone and iPad customers about ways to pay outside the official App Store.

Content of the Amendments

The amended Telecommunications Business Act added, among other things, the following prohibited acts of telecommunications business operators:

  • Acts of application-market operators that, improperly utilizing their dominant market status, force certain payment methods on mobile-content providers intermediating mobile-content transactions.
  • Acts of application-market operators that unfairly induce or force mobile-content providers to not register mobile content in other app markets.
  • Acts of application-market operators that improperly delay the review of mobile content.
  • Acts of application-market operators that unfairly delete mobile content from app markets.
  • Other acts of application-market operators that unfairly impose discriminatory conditions and restrictions on mobile-content providers. (Amended Telecommunications Business Act art. 50, para. 1, subparas. 9–13.)

The Korean legislation is the first of its kind in the world and has been praised by app developers.

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Chicago citation style:

Umeda, Sayuri. South Korea: Amended Telecommunications Business Act Will Ban App Payment Monopolies. 2021. Web Page. https://www.loc.gov/item/global-legal-monitor/2021-09-16/south-korea-amended-telecommunications-business-act-will-ban-app-payment-monopolies/.

APA citation style:

Umeda, S. (2021) South Korea: Amended Telecommunications Business Act Will Ban App Payment Monopolies. [Web Page] Retrieved from the Library of Congress, https://www.loc.gov/item/global-legal-monitor/2021-09-16/south-korea-amended-telecommunications-business-act-will-ban-app-payment-monopolies/.

MLA citation style:

Umeda, Sayuri. South Korea: Amended Telecommunications Business Act Will Ban App Payment Monopolies. 2021. Web Page. Retrieved from the Library of Congress, <www.loc.gov/item/global-legal-monitor/2021-09-16/south-korea-amended-telecommunications-business-act-will-ban-app-payment-monopolies/>.