South Korea's antitrust watchdog said Sunday that it had ordered Google and Apple to revise unfair provisions, including the no-refund policy, in operating their mobile application stores. It is the first time that an antitrust body here has taken corrective action against international app store operators.
''We expect the measure, aimed at protecting consumers, will have a ripple effect on similar cases throughout the world," the Korea Fair Trade Commission said in a press release.
Following the FTC orders, the Google Play webstore will design a customer refund system based on Web developers' refund polices. Apple's iTunes app store will have to send a notice to users when it changes the terms in its contract.
"The FTC's corrective orders will become benchmark cases for other countries, which face growing customer complaints over unfair provisions in contracts of mobile webstore operators," said Hwang Won-chul, head of the KFTC's Adhesion Contract Division.
"While Google will limit its response to the FTC to the domestic market, Apple said it would consider applying the revised contract terms globally," he added.
Behind the FTC move was continued requests by the Citizens' Coalition for Economic Justice, a nongovernmental organisation. The civic group asked the FTC to correct unfair sales practices of domestic and foreign mobile app stores last March. In response to the demand, the antitrust watchdog ordered domestic companies including KT, SK Planet, LG Electronics and LG Uplus to correct their unfair business terms in contracts for the webstores in March of this year.
It took several more months to complete investigations of the foreign companies' head offices in Korea.
"South Korea is ahead of other countries in dealing with unfair business practices as it has exclusive laws to regulate unfair clauses," said Yoon Chul-hwan, an official at the Citizens' Coalition for Economic Justice.
The organisation plans to report the repair clauses for Apple's iPhone to the KFTC this week.
"Currently, users are not able to get their original phones back from repair shops after they have their phones repaired. We will file a complaint against it (Apple) to see if that is also an unfair sales practice," Yoon said. If the case is accepted, it will be another first revision globally.