Google, Apple Hit in South Korea by World’s First Law Ending Their Dominance Over App-Store Payments

SEOUL—Google and Apple Inc. will have to open their app stores to alternative payment systems in South Korea, threatening their lucrative commissions on digital sales.

A bill passed Tuesday by South Korea’s National Assembly is the first in the world to dent the tech giants’ dominance over how apps on their platforms sell their digital goods. It will become law once signed by President Moon Jae-in, whose party strongly endorsed the legislation.

The law amends South Korea’s Telecommunications Business Act to prevent large app-market operators from requiring the use of their in-app purchasing systems. It also bans operators from unreasonably delaying the approval of apps or deleting them from the marketplace—provisions meant to head off retaliation against app makers.

Companies that fail to comply could be fined up to 3% of their South Korea revenue by the Korea Communications Commission, the country’s media regulator.

The law will be referenced by regulators in other places—such as the European Union and the U.S.—that also are scrutinizing global tech companies, said Yoo Byung-joon, a professor of business at Seoul National University who researches digital commerce.