[Asia Economy reporters Seulgina Jo and Aeri Boo] "This is Google's tyranny." "Small and medium-sized game companies are already paying several times their employees' wages in commissions. Now the entire ecosystem will become like this."
Despite ongoing controversies, Google has ultimately expanded its '30% commission' policy to all apps and content, raising concerns that the domestic mobile content ecosystem could effectively reach a 'destruction stage.' Beyond the immediate increase in consumer price burdens, there are worries that Google's control over domestic content providers will become even stronger. This is why criticism continues over the app market giant's abusive practices, which are tantamount to a monopoly.
Google's share is 3,000 won on a 10,000 won payment... Content price hikes inevitable
The commission policy announced by Google on the 28th (local time) essentially forces app developers listed on Google Play to use Google's own payment method (in-app payment) when selling items or content. In this process, a whopping 30% commission goes to Google. Considering that commissions for credit card or mobile payments are in the mid-1% range, this is an extremely high rate. Newly registered apps will be subject to this policy starting January 20 next year, and existing apps from October.
Until now, unlike Apple's App Store which enforces a 30% commission on all apps, Google has only applied this policy to games. The price of one Naver Webtoon usage ticket (cookie) is 100 won on Google Play and 120 won on Apple's App Store. However, due to Google's commission policy change, starting next year, prices consumers must pay for webtoons, music, e-books, and video subscription services are expected to rise to Apple App Store levels. An industry insider confirmed the price increase, saying, "It inevitably has to be reflected in consumer prices."
Small and medium developers pushed to survival threat... Will the National Assembly put the brakes on Google?
This is also expected to increase cost burdens on small and medium developers, ultimately threatening their survival. A mobile game industry official pointed out, "Few can withstand a 30% commission. Startups are shackled from the start." According to a study titled ‘Google In-App Payment Research Centered on the Game Industry’ by Lee Tae-hee, Dean of the Graduate School of Global Startup Venture at Kookmin University, the domestic mobile game industry, which already applies a 30% commission, paid 1.48 trillion won in commissions to platform operators last year. Mobile game company Com2uS spent an amount on app commissions equivalent to 2.4 times its employee wages.
Concerns are also raised that Google's increasing dominance over domestic content providers will turn Korea into a 'digital colony.' Kim Jae-hwan, Policy Director of the Korea Internet Corporations Association, which includes Naver and Kakao, predicted, "A 'vertical integration' situation will arise where Google monopolizes almost all services such as search, video, and e-books." There is also criticism that forcing the payment system itself is an attempt to create a 'Google world.'
A developer representative lamented, "(Google and Apple) forcing in-app payments and imposing a 30% commission in a monopolistic market is unfair." The industry is pushing back, arguing that the 'app market giants,' which are effectively monopolies, forcing such payment methods is itself a violation of the law.
The National Assembly and related government departments are also paying attention to these unfair practices. Nancy Mable Walker, CEO of Google Korea, is included in the witness and reference list for next month's National Assembly audit, and related legislative amendments have been consecutively proposed. Jo Seung-rae, a member of the Democratic Party of Korea, said, "It is problematic when a specific business operator, regardless of domestic or international status, uses market dominance to disrupt the entire ecosystem," adding that they are focusing on unfair practices using superior status, such as forcing specific payment methods and unjust delays in app reviews.
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