Apple Faces Dispute With South Korean Regulators Over Payment System Openness

South Korea’s government had a clash with Apple Inc. on Friday regarding new regulations that will end requirements that app developers use Apple’s payment systems. A South Korean official also said that an investigation regarding Apple’s compliance could be forthcoming.

South Korea amended its Telecommunication Business Act this summer to cut back on Apple’s domination of the Korean smartphone market and prohibit giants like Apple and Google from charging commissions on purchases made by customers inside their apps.

As the change in the law went into effect, Apple refused to change its app store policies, and the company told South Korean regulators with the Korea Communications Commission (KCC) that it was already in compliance. An official with the KCC said that Apple’s stance “goes against the purpose of the amended law.”

The official, who spoke on the condition of anonymity, stated that he would encourage Apple to change its policy to allow developers more freedom in terms of payment method alternatives. He added that if Apple fails to comply, he will seek a “fact-finding probe” that could lead to fines and penalties.

Google has said that it has advised the KCC that it intends to comply with the changes in the law and would begin allowing apps in the Google Play Store to offer third-party payment options. The company added that it plans to meet with the KCC starting next week to ensure compliance.

Antitrust attorney Jung Jong-chae said that Apple’s exposure to risk under the new regulations is more incredible than Google’s, stating that the different attitudes of the two companies may be a result of Apple’s control over phone hardware, operating system software, and app markets, as all relate to payment systems. He said that if Apple loses dominance in any of those areas, it could lead to “calls for openness on other fronts.”

Apple’s stock price (AAPL) closed on Friday at $144.84 per share, up about 12 percent so far this year.