[Reverse Discrimination Caused by Regulation] Raising App Transaction Fees and Hindering Competing Apps... Korea Becomes a 'Google Playground'

App Transaction Fee Increase from October
Forced In-App Payment and 30% Commission
Obstruction of Competing App Market Entry

[Asia Economy Reporter Kang Nahum] While domestic IT companies have become victims of reverse discrimination policies, Google is continuing its abusive practices against domestic companies by leveraging its monopolistic position in the market.

A representative case is the increase in the ‘app toll fee.’ According to industry sources on the 3rd, Google will enforce in-app payments (IAP) for all apps and digital content payments in its app marketplace starting this October and impose a 30% commission fee. Google does not recognize each app’s own payment system and requires all app payments to go through Google’s payment system, with the 30% commission going entirely to Google.

As a result, the cost burden on small and medium-sized developers inevitably increases. There are also concerns that most of the increased commission fees will be passed on to consumers.

In this regard, discussions on the ‘Google Abuse Prevention Act (Amendment to the Telecommunications Business Act)’ are underway in the National Assembly, but the passage of the law is still uncertain. Political circles have turned cautious as the U.S. Trade Representative (USTR) conveyed concerns about this law to the Korean Embassy in the U.S., leading to pressure from the U.S. government level.

Interference with competing app markets is also cited as an example of Google’s abusive behavior. The main issue is that domestic game companies such as Nexon, NCSoft, and Netmarble were forced to release their apps only on Google’s app market, the ‘Play Store.’ If they released apps on competitors’ app markets, they would only have to bear lower commission fees, but by excluding competing app markets, Google has caused domestic companies to bear higher commission fees.

The Fair Trade Commission has started sanctions related to this, but the punishment is expected to be mild. According to the current Monopoly Regulation and Fair Trade Act, if a market-dominant business operator abuses its position, a fine of 3% of the related sales is imposed. The industry expects the Fair Trade Commission to impose a fine of 50 billion KRW on Google, and by reverse calculation, it is estimated that Google’s revenue from exclusive game app releases could reach 2 trillion KRW.

Google’s discriminatory behavior toward different countries is also being criticized. According to foreign media reports, Google agreed to pay news usage fees in Germany early last year and recently signed a contract to pay 1.3 billion USD (approximately 1.43 trillion KRW) over three years to French media outlets.

On the other hand, when Australia, a relatively smaller market, pushed for legislation to enforce news usage fee payments, Google responded strongly by threatening to suspend its search services in Australia. In Asian regions including South Korea, Google has remained completely silent on discussions about imposing news usage fees.