Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Assembly to grill Apple, Google execs over in-app purchase fees
Google Korea Country Director Kim Kyoung-hoon, left, takes the oath of witness during a National Assembly audit in Seoul, Oct. 21, 2022. Second from right is Apple Korea Vice President Ahn Cheol-hyun. Korea Times file
By Nam Hyun-woo
Chances remain slim for big tech firms to change fee policies
The National Assembly’s Science, ICT, Broadcasting and Communications Committee will summon senior executives from Google and Apple to question them about their policies regarding the 30 percent fee for in-app purchases, a practice that the Korean government has been struggling to address for years.
According to the committee, it has summoned Google Vice President Markham Erickson, Google Korea Country Director Kim Kyoung-hoon, and Apple Korea Vice President Ahn Cheol-hyun as witnesses for the committee's audit of related government agencies, which will begin on Monday.
Kim and Apple Korea CEO Peter Denwood are also on the list of witnesses summoned for a separate audit by the Assembly’s National Policy Committee.
Lawmakers are expected to question them about several issues related to their business practices in Korea, including the in-app purchase fees.
Logos of app stores of Google and Apple / Korea Times file
Google and Apple have been taking a 30-percent commission from in-app purchases, leveraging their dominant positions with Google Play and the App Store. According to the Korea Industry Forum, the costs incurred by Korean game companies due to the in-app payment fees imposed by these platforms amount to approximately 9 trillion won ($7.9 billion) from 2020 to 2023.
To curb such practices, the Korean government implemented a law in March 2022 prohibiting app store operators from forcing developers to use their in-app payment systems. This law gained international attention as the world’s first regulation of its kind.
Since the law aims to prohibit the act of forcing developers to use specific in-app payment systems, Google and Apple have circumvented the law by allowing third-party payment systems while simultaneously imposing fees of up to 27 percent, citing privacy protection.
The Korea Communications Commission (KCC), which oversees the country’s internet service businesses, warned Google and Apple on Oct. 6, 2023, of a combined fine of 68 billion won — 47.5 billion won for Google and 20.5 billion won for Apple — for violating the law.
However, this was merely a warning, and the fines will be finalized after the KCC hears the companies’ responses to its decision and completes other review processes. Both Google and Apple immediately filed objections to the KCC, and the authority has been reviewing them for a year.
Regarding the reasons for the prolonged review, Lee Jin-sook, then-nominee for KCC chairperson, stated during her confirmation hearing in July, “The review is at its final stage, and the KCC is still examining Google’s appeal because the company submitted lengthy explanations.”
Korea Communications Commission acting Chairperson Kim Tae-kyu attends a press conference at the commission's headquarters in Gwacheon, Gyeonggi Province, Aug. 30. Yonhap
However, it remains uncertain whether the KCC will finalize its fines on Google and Apple in the near future.
Mired in political conflicts regarding the KCC’s ideological fairness, the commission has been paralyzed for over a year, with the chairperson currently suspended from her position due to an ongoing impeachment trial. The seven-member commission now has only one member, acting Chair Kim Tae-kyu.
The outlook is also pessimistic regarding whether the executives of Google and Apple summoned for the audits will appear at the Assembly. The country’s law stipulates that those summoned as witnesses for an Assembly audit are required to present themselves unless they have "justifiable reasons" for their absence, which must be documented formally.
If a witness fails to appear without a justifiable reason, he can face up to five years of imprisonment or a fine ranging from 10 million to 50 million won. However, this typically results in fines, with numerous cases of business tycoons, conglomerate owners, and other influential figures choosing to pay fines instead of appearing at audits.
Potential “retaliation” by Google or Apple is another concern. In 2022, Korean internet service firm Kakao planned to implement a third-party payment system a month after the law took effect but withdrew its plan in July of that year after Google pressured Kakao by restricting updates to the Kakao Talk app.
“In December of last year, the U.S. found that Google's imposition of the 30 percent fee was unlawful. However, Korean companies cannot even anticipate protective measures from the government and remain hesitant to take legal action against Google and Apple for fear of retaliation,” Citizens’ Coalition for Economic Justice, a civic group, said in a statement.
“We urge domestic game studios and other app developers to participate in class action lawsuits in the U.S. before it is too late. The Assembly should also consider introducing punitive compensation measures, and the government needs to ensure effective enforcement measures against big tech companies.”