$Alphabet Inc-CL A(GOOGL.US)$ and $Apple Inc(AAPL.US)$ are set to take a blow in South Korea from a new law that requires them to open their app ecosystems to competing payments systems, but a more severe hit could come from the rules creating a precedent for other countries.
The dominance of Google and Apple over app-store payments is on the radar of regulators worldwide and the bill passed in South Korea might pave the way for similar regulation elsewhere.
Around a fifth of Apple's revenue in fiscal 2020 came from services including its app store, while the business segment including Google's app store represented about 12% of revenue last year at its parent Alphabet Inc. South Korea accounts for just 1.7% of Apple's revenue and makes up 1.8% of Alphabet's revenue, according to FactSet data as of September and December 2020, respectively.
App-store charges likely represent a small fraction of that. The bill seeks to prevent app-market operators from requiring the use of their in-app purchasing systems, threatening the commissions that Apple and Google charge.
Once the bill is signed into law, app developers should be able to look for alternative payments systems, potentially lowering costs, while payment providers like $PayPal (PYPL.US)$, $Amazon.Com Inc(AMZN.US)$, Stripe and $Square, INC.(SQ.US)$ could target the in-app purchase market.
Write to Adria Calatayud at adria.calatayud@dowjones.com
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(END) Dow Jones Newswires
August 31, 2021 12:43 ET (16:43 GMT)
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