Earlier this year, the South Korean government enacted the Telecommunications Business Act. With it, the legislative body ruled that companies designated as having market dominance must allow for alternative payment options beyond first-party ones. Unsurprisingly, despite Google being a primary focus for the new law, Apple has picked up the majority of attention due to its own rules for the App Store.
And it appears Apple is not quite ready to budge on the matter, despite the legal decisions made in South Korea. As reported recently by Reuters, Apple appears to be on a “collision course” with South Korean regulators due to the company’s hesitancy to make any changes. The Telecommunications Business Act gave both companies until mid-October to file plans to offer up changes, which will ultimately allow third-party payment options for customers using iOS and Android.
The report says that Google has confirmed with the regulators that it will be complying as required. It will be speaking with regulators on how to move forward, which will include allowing third-party payment systems in Google Play, beginning next week.
How about Apple, though? According to the report, Apple’s not only not ready to budge, it actually has a pretty wild argument for why it’s not going to: it’s already done it. Apparently, according to the report, Apple has told Korean Communications Commission (KCC) officials that it is already complying with the new rules in South Korea, and, as a result, won’t be moving forward with any new compliance measures.
From the report:
Apple Inc. was on a collision course with South Korea on Friday over new requirements that it stop forcing app developers to use its payment systems, with a government official warning of a possible investigation into the iPhone maker’s compliance.
The development comes after South Korea amended the Telecommunication Business Act in August to try to curb the tech majors’ market dominance and stop the big app store operators such as Apple and Alphabet Inc’s Google from charging commissions on in-app purchases.
The law went into effect last month but Apple had told the South Korean government that it was already complying and did not need to change its app store policy, a Korea Communications Commission (KCC) official in charge of the matter told Reuters.
One KCC official, requesting to remain anonymous, that this, “goes against the purpose of the amended law.” The official noted that they are still engaged with talks with Apple regarding compliance. However, as it stands, it appears Apple has already decided how it will proceed.
More to the point:
The regulator would ask Apple’s South Korean unit for a new company policy giving greater autonomy in payment methods, and if Apple failed to comply, would consider measures such as a fact-finding probe as a precursor to possible fines or other penalties.
The report adds a comment from Jung Jong-chae, a lawyer that specializes in antitrust law, who says Apple has more to lose than Google in this matter:
Differences between Apple and Google in willingness to give ground may be because Apple controls everything from hardware to operating system (OS) to app market to payment system.
…
And (Apple) has more to lose if its dominance breaks on any front, which could lead to calls for openness on other fronts.
It’s an interesting argument on Apple’s part. Surely they believe, maybe in part, that they are compliant because there are options for not using Apple’s first-party payment system for some products, at least in regards to physical products (like Uber and what not). However, that’s obviously not what the Telecommunications Business Act is about, as it aims to force these companies to install third-party payment options across the board. Among other things.
What’s more, we’ve seen Apple go to some great lengths to comply with local government laws and regulations. Even going as far to remove apps from local App Stores due to government demands. But this? With changes to the App Store that would directly impact App Store revenue? Apparently that’s where Apple will drag its feet.
Especially when all of this first surfaced, Apple was pushing back against the law, saying:
Apple had a comment ready to go, saying that this change put forth by the South Korean government would put users in danger of, “fraud, undermine their privacy protections, make it difficult to manage their purchases.” The company goes on, saying, “user trust in App Store purchases will decrease as a result of this proposal — leading to fewer opportunities for the over 482,000 registered developers in Korea who have earned more than KRW8.55 trillion to date with Apple.” So, while Apple’s initial argument is one it has used in the past, leaning heavily into the safety and privacy and security of iOS users, it also adds that developers will see less interest from App Store users in general. Which means less money for them, too.
Apparently something has changed since the passing of the rules where Apple’s argument evolved from, “this will put users in danger,” to “we’re already in compliance.”
As John Gruber notes, Apple’s response at this point is kind of silly, and reminds him of a moment from Monty Python and the Holy Grail:
It will be interesting to see what happens next.