Apple and Google Staring at New App Store Law in South Korea – Report

Apple (AAPL) and Alphabet’s (GOOGL) Google may soon have to open up their app stores to other payment systems. Bloomberg reports the passing of a bill by The National Assembly of South Korea that bars companies from forcing people to use certain payment systems.

The Telecommunications Business Act in South Korea threatens to disrupt how Google and Apple operate if signed into law by President Moon Jae-in. Furthermore, it threatens to set a radical precedent in other markets, which could force the tech giants to open up their app stores. (See Apple stock charts on TipRanks)

Once signed into law in South Korea, people using Apple and Google products will be allowed to choose their preferred payment options. In addition, companies like Epic Games will be able to deal directly with customers instead of being restricted to Google Pay and Apple Pay for payments.

The development in South Korea comes as Apple and Google face a string of lawsuits over how they control the smartphone arena with their app stores. Their “gatekeeper control” approach is the bone of contention, with most parties disgruntled by the terms on app marketplaces.

Epic Games has already sued iOS and Android, arguing that the fees the two platforms charge are unfair. Apple and Google currently charge as much as 30% in fees on purchases made through their app stores. They also prohibit people from using alternative payment options on their platforms.

Recently, Bernstein analyst Toni Sacconaghi reiterated a Hold rating on Apple with a $132 price target, implying 13.06% downside potential to current levels. According to the analyst, Apple’s advertising business is growing at an impressive rate.

Sacconaghi stated, “Our analysis suggests the business will be ~$3B this calendar year and could grow to be ~$7B in FY 23: key drivers include the introduction of search ads to China in June of this year (as well as 46 other countries in 2019), higher ad loads, and the introduction of banner ads in May of this year.”

Consensus among analysts is a Moderate Buy based on 19 Buys, 5 Holds, and 1 Sell. The average Apple price target of $165.33 implies 8.89% upside potential to current levels.

AAPL scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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