South Korea move to curb Apple and Google dominance elates India's app firms too

New Delhi: If and when the latest South Korean legislation, passed by its Parliament, gets enforced, that may make a dent on the control wielded by tech giants Google and Apple over online payment systems via their sway over platforms: of Apple through its operating system iOS and Google through its Android.

The bill passed in Korean parliament on Tuesday will become law once signed by President of South Korea, Moon Jae-in.

App developers have long been demanding freedom to choose alternative methods of payment and distribution, such as via third-party app stores installed of exclusively through the two operating systems. In the absence of this, Apple and Google are alleged to be stifling competition by insisting on using the in-app use of their proprietary payment systems which charge commissions of up to 30 per cent on apps and subscriptions sold through the respective stores.

With the new law, South Korea will become the first country in the world to bring in such a legislation and may be seen to be responding to global criticism of the two giants' practice.

The law-making move came through amendments to the S Korean Telecommunications Business Act that permits or even promotes fair competition in the app making market. As per the bill, apps market operators cannot force developers to use a specific payment system and thus take advantage of their dominant position in the industry. Nor can they do such activities as blocking apps from registering on their stores, delaying app registration or unfairly deleting apps from the app market. The move is believed to help app developers to reduce payment of commissions, thus benefiting both developers and consequently the end-users.

This move comes as regulators at a global level have of late been looking at the practice of app stores in relation to the fees they are charging developers.

Similar legislation has been attempted elsewhere too: in the US, three senators introduced a bipartisan Bill earlier in August to promote fair competition by regulating in-app purchases and forcing dominant players from excluding third-party app stores from their operating systems.

Likewise, the Competition Commission of India (CCI) has been investigating Google for potential abuses of its dominant position in the market to promote its proprietary payment services. Apple and Google have both protested against the regulatory moves through new laws.

The South Korean move has predictably elated app developers and the market in general in India. Rakesh Deshmukh, Co-founder & CEO of Indus App Bazaar, India's largest third-party app store, shared his support for the move. He said that "policy needs to support innovation. We hope that Google enhances developer choice by allowing the listing of app distribution platforms like Indus App Bazaar on the Play Store. That would help us to formulate a B2C journey. I hope that App Stores like ourselves are allowed a fair play environment on Google Play and Android. Furthermore, in India, we need to look into developer choice for app distribution & payment gateways from a policy perspective."

Sijo Kuruvilla, Executive Director of the Alliance of Digital India Foundation (ADIF), a startup alliance, welcomed the move by tweeting "Any legislation on the matter anywhere in the world will set a precedent for other nations to adopt and build on. To fair markets."

On the whole, South Korea is seen as a pioneer in this direction, and any legislation by one country will set a precedent - and trigger - for other countries to attempt similar laws.

Not surprisingly, app developers all over the world have hailed the South Korean move. That includes, the Coalition for App Fairness (CAF), an industry association of apps, and Match Group, that operates the largest portfolio of dating and social discovery apps such as Tinder and OKCupid, spoke lauding South Korean Legislators' act.

Other Indian players have also reacted positively to the curb on what is called Google's 'apps tax' for its charge on in-app purchases and impact on local players.

NFN Labs, developers of popular apps like Screeny and Vookmark, who have had their share of run-ins with Google, Twitter, and Apple, have also been welcoming of alternative stores and choices of payment gateways.

The implications of the move in the Indian market is yet to be gauged, but Rakesh Deshmukh said there is more that can be done with app distribution in India, "It's about the choice of distribution; we all know that Google Play Store and App Store will continue to exist but we need more competition. We believe that choice is central to competition and hence when developers choose to distribute via our infrastructure, we allow a choice of payment gateway. This choice we believe would allow developers leverage to negotiate a reasonable fee with the two companies and payment gateway providers."

(With inputs from IANS)