Google and Apple have been hit with a corrective order and a potential maximum fine of 680 billion won by the Korea Communications Commission (KCC) for forcing app developers into in-app payment systems, an act described as 'overbearing.'
The KCC announced its intentions based on the results of a factual investigation, which began on August 16th of the previous year, into the unfair practices of app market operators forcing specific payment methods. On the 6th, they notified Google and Apple of the corrective measures and unveiled plans for the imposition of the fine.
The KCC stated, "App market operators Google and Apple have abused their dominant trading position by mandating specific payment methods, and their undue delay in app reviews are considered a violation under the Telecommunications Business Act."
The commission added, "Especially, the act of forcing specific payment methods by Google and Apple potentially undermines the spirit of the law revised in September 2021 to promote fair competition in the app market."
The amendment of the Telecommunications Business Act in September 2021 prohibits app market operators from coercing app developers into in-app payment systems. In-app payments are a system where consumers make payments within the app for premium content, allowing the app marketplace operators to collect a fee.
Nevertheless, Google sparked controversy by mandating in-app payments in April of the previous year. Apple also allowed web payment outlinks to be shown in reading tool apps, thus enabling external payments, but like Google, only permitted in-app payments for gaming apps.
Starting May last year, the KCC commenced a review of potential violations of the Telecommunications Business Act by companies like Google and Apple. By August, the commission began its factual investigation, and after approximately 13 months, reached a decision on penalties.
The KCC also viewed Google and Apple's actions of not notifying app developers about review durations or specific reasons for review delays as violations of the Telecommunications Business Act.
Additionally, the KCC has notified Apple of its corrective action due to its discriminatory practice of levying fees solely on domestic app developers.
Previously, Apple charged domestic app developers a 30% fee based on the final consumer price, which included a 10% value-added tax. However, for foreign app developers, fees were levied based on the supply price after excluding the value-added tax.
Upon investigation by both the KCC and the Fair Trade Commission, Apple announced voluntary corrective actions from January of this year, as announced in November of the previous year. However, both the KCC and the Fair Trade Commission have maintained their stance to review and deliberate on the legalities preceding the voluntary corrections.
After collecting opinions from businesses on the corrective measures and going through KCC reviews and resolutions, final decisions will be made on the corrective order and the proposed fines - 475 billion won for Google and 205 billion won for Apple, totaling a maximum of 680 billion won.