Will It Adopt Corrective Measures in Korea?
The deadline for Google and Apple to submit their opinions on corrective measures proposed by the Korea Communications Commission (KCC) regarding the “coercive practices of utilizing their own in-app payment system” has been extended once again. Following Google’s recent defeat in a first-instance lawsuit in the United States related to the in-app payment system, attention is focused on whether Google will adopt corrective measures in South Korea. The company has declared its intention to openly change its Google Play policies, adding to the anticipation surrounding its response in the South Korean market.
According to sources in the information technology (IT) industry on Dec. 21, the KCC stated that Google and Apple had requested a deadline extension a day prior to submit their opinions on the corrective measures related to the mandatory in-app payment system. The KCC has granted this extension, providing them until the end of the year.
Originally, the deadline for businesses to submit their opinions on the corrective measures was set for early this month. However, Google and Apple requested an extension, citing the need for time-consuming procedures such as reviewing documents and reporting to their U.S. headquarters. Consequently, the deadline was extended to Dec. 20.
This incident originated when Google announced its “mandatory in-app payment system” policy in 2020, requiring the use of in-app payment methods that impose a maximum commission of up to 30 percent. In response, app developers opposed this compulsory in-app payment approach. Subsequently, the National Assembly also amended the Telecommunications Business Act in 2021 to prohibit the mandatory enforcement of the in-app payment system.
As a result, Google proposed a “third-party payment within the in-app system” method last year. This approach allows various payment methods other than in-app payments, but mandates that the payment system be built within the app.
In this case, however, app developers encounter additional fees, resulting in an overall increased fee burden compared to the Google-mandated in-app payment system. This sparked controversy over perceived loopholes, but Google remained adamant about its implementation. Apple also adopted a similar payment method in July of last year.
Amid growing criticism that they were undermining regulatory measures, the KCC initiated an investigation into unfair practices, such as mandatory in-app payment systems, starting from August of last year. Following the investigation, it announced on Oct. 6 that it will impose a maximum fine of 68 billion won (US$52.23 million).
The KCC determined that Google and Apple violated the provisions of the Telecommunications Business Act by abusing their dominant positions in transactions, compelling specific payment methods, and unfairly delaying app reviews. It has notified Google and Apple of corrective measures in response to these violations.
At that time, the two companies expressed their disagreement with the KCC’s stance. Apple said, “We do not agree with the findings of the investigation announced by the KCC and believe that we comply with the Telecommunications Business Act,” adding, “We will share our views through dialogue.” Google mentioned, “We will carefully review the corrective measures and submit our opinions. Once we receive the final written decision, we will carefully consider the direction of our response.”
If Google and Apple officially submit their opinions by the end of the year, the KCC plans to undergo the necessary procedures, including reports and general meetings, after the Chairman of the Anti-Corruption and Civil Rights Commission (ACRC), Kim Hong-il, assumes the position of chairman of the KCC. Following these steps, the corrective measures will be finalized.
Meanwhile, Google recently reached an agreement to pay a US$700 million (911.4 billion won) settlement to the government and consumers and drop an antitrust lawsuit related to a similar case in the United States. Google faced a recent setback in a first-instance lawsuit brought by the game developer Epic Games. Given the assessment that this ruling could establish a precedent for other antitrust lawsuits, potentially resulting in significant damages in civil suits, Google appears to have chosen a settlement.
Furthermore, Google announced that it will allow app developers to use their independent payment systems within the in-app payment process and simplify the procedure for U.S. users to directly download apps from developers.