[Asia Economy Reporter Joselgina] Google will ultimately enforce in-app payments and a 30% payment commission on all apps starting next year. Despite ongoing controversies, following Apple, Google has officially implemented the so-called '30% app toll,' raising concerns that it will directly impact not only domestic app developers but also consumers. There are also criticisms that the monopolistic app market giant's abuse of power is excessive.
Google: "In-app payments will be enforced on all apps starting next year"
According to economic media CNBC and others on the 28th (local time), Google announced that starting next year, it will enforce in-app payment regulations for app developers distributing software through Google Play. In a blog statement that day, Google clarified, "All developers selling digital goods in their apps must use Google Play's payment system," and confirmed, "We hope our policy will be applied consistently and fairly to all developers."
This means that if a consumer purchases a 10,000 KRW item, Google Play will take a 30% commission through in-app payments, according to major foreign media. Until now, Google had imposed a 30% commission only on games and allowed some apps to use their own payment systems, but it has changed its commission policy to be the same as Apple's App Store.
The policy will be officially applied from January 20 next year. However, Google has given existing developers a grace period of one year until September 30, 2021, to integrate the payment system. Google explained that its commission policy change applies to less than 3% of app developers. It also added that it will enhance Android 12, which will be released next year, to make it easier for users to use third-party app markets.
Concerns over consumer harm due to app market giant's abuse of power
If Google imposes a 30% commission on all apps, content usage fees for videos, music, webtoons, etc., for smartphone users with Google's operating system (OS) will inevitably increase by 20-30%. This is feared to threaten the survival of domestic app developers and lead to consumer harm. In particular, more than 60% of domestic content companies are classified as small businesses in terms of operating profit, making them vulnerable to the commission policies of powerful app market giants. Google Play and Apple App Store account for nearly 90% of the domestic market share.
App developers, who are in the position of the weaker party, find it difficult to openly oppose. Previously, Epic Games, the developer of the popular game Fortnite, opposed Apple's App Store commission policy by building its own in-app payment system but was removed from both the App Store and Google Play. Epic Games has also sued Google.
TechCrunch pointed out, "The problem is that app markets have become the only way for developers to distribute apps to mobile consumers." A developer representative lamented, "(Google and Apple) forcing in-app payments and imposing a 30% commission in a monopolistic market is unfair."
In Korea, concerns about digital colonization are rising amid this app toll controversy. Currently, foreign platforms' domestic sales reach about 1.8 trillion KRW, which is about 30% of the domestic game market. This is the background for concerns about overseas outflow of domestic industry profits due to the app toll. If native platform development does not proceed, there is growing anxiety that it could lead to dependency in the domestic content industry in the future.
National Assembly also focuses on unfair practices by Google and Apple
The National Assembly and related ministries are also paying attention to unfair practices by Google and Apple. Nancy Mable Walker, CEO of Google Korea, is included in the list of witnesses and reference persons for the upcoming National Assembly Science, ICT, Broadcasting and Communications Committee audit next month.
Cho Seung-rae, a member of the Democratic Party of Korea who recently proposed a partial amendment to the Telecommunications Business Act to establish measures to prevent abuse such as forced in-app payments by app market operators, said, "It is problematic for a specific business operator to disrupt the entire ecosystem by using market dominance regardless of domestic or foreign status," and added that they are focusing on unfair practices using superior status, such as forcing specific payment methods and unjust delays in app reviews.
The Ministry of Science and ICT, the Korea Communications Commission, and other related ministries are reviewing whether the commission policies of the two companies violate laws. The Korea Internet Corporations Association submitted a report to the Korea Communications Commission on the 24th of last month, claiming that Google US headquarters and Google Korea's forced specific payment methods violate the Telecommunications Business Act.
However, concerns about the effectiveness of sanctions have also been raised in the industry. Industry insiders generally agree that there is insufficient basis to consider it illegal and that it is uncertain whether extraterritorial application is possible.
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