South Korea is the first country in the world to force American technology groups Alphabet (Google) and Apple to open their smartphones to alternative payment systems.

The South Korean parliament passed a corresponding amendment to the telecommunications law on Tuesday.

With this, South Korea is pushing ahead against other countries in which legislative initiatives against the presumed monopoly power of Google, Apple and other large technology groups are being discussed.

The decision in Seoul could set an international precedent.

Patrick Welter

Correspondent for business and politics in Japan, based in Tokyo.

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With the change in the law, the providers of app stores must allow smartphone users to pay for purchases of software programs using different payment systems.

That will in all likelihood intensify competition in the digital software marketplaces and put pressure on the 30 percent share that Apple and Google keep from payments in their app stores.

In South Korea it will in principle be possible in the future for a large game developer like Epic Games to settle titles like Fortnite directly with the users and avoid the fees of the app store owners.

Software developers and experts in South Korea expect that small and young providers of computer programs in particular will benefit from the new regulation.

Sales of 5.5 billion euros

In a way, Apple is falling victim to Google in the Asian country.

Political efforts to open up payment systems gained momentum after Google announced last autumn that it would strictly enforce its payment rules and the 30 percent fee from October this year.

So far, Google had allowed users in South Korea to make exceptions.

With its Android operating system, Google is the dominant provider of an app store.

One of the reasons for this is that the local top dog Samsung Electronics uses Android for its smartphones.

Last year, according to an industry association, sales of app software were 7.5 trillion won (5.5 billion euros) in South Korea.

For this year an increase of 21 percent to 9.1 trillion won is expected.

67 percent of this is accounted for by Google and its Android system and 22 percent by Apple with its iPhones and iPads.

The remainder is covered by the local telecommunications service provider SK Telecom with its app store.

Violation of free trade agreements?

Months of lobbying by Apple and Google were unable to prevent the change in the law.

Google had described the discussion in South Korea as rash.

Apple pointed out in its statements that the security and privacy of users were at stake.

As usual, Apple also emphasized the value of its app store for software developers in South Korea. According to the American company, the South Korean developers have already earned more than 8.55 trillion won (6.3 billion euros) in Apple's app store. Tech industry lobby groups also invoked the risk that the new regulation could be understood as a trade barrier and a violation of the American-Korean free trade agreement because it would particularly affect Google and Apple. This interpretation is of course controversial.

The details of the new regulation have not yet been determined and will have to be specifically defined. There could be corrections in the interpretation, said the chairman of the South Korean communications authority, Han Sang-hyuk, to journalists last week. They are aware of the concerns of Apple and Google and will apply the rules in such a way that the interests of companies and users are taken into account.

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