[Comprehensive] "Can't Stand Google and Apple’s Abuse of Power" Native App Market One Store's Counterattack

[Asia Economy Reporter Seulgina Cho] The native app market ‘One Store’ has launched its counterattack. The three major telecom companies, frustrated with the commission abuse by the app ecosystem giants Apple and Google, have united around One Store. KT and LG Uplus have invested approximately 26 billion KRW in shares of One Store, a subsidiary of their competitor SK Telecom, moving beyond simple business cooperation to establish a joint responsibility management system.

This move stems from a sense of crisis that powerful overseas platforms have effectively dominated the domestic ICT ecosystem. The three telecom companies judged that it is time to join forces to nurture a native platform to avoid becoming a ‘digital colony’ or a ‘content subcontracting base.’ In particular, Google Play’s announcement to take a hefty 30% commission, leveraging its roughly 70% share of the domestic market, directly prompted the fiercely competitive three telecom companies to join hands.

◆Three Telecom Companies Invest in Shares... Birth of K App Market

According to the three telecom companies and One Store on the 3rd, KT and LG Uplus recently invested a total of 26 billion KRW in One Store, securing a 3.8% stake. KT invested 21 billion KRW (3.1% stake), and LG Uplus invested 5 billion KRW (0.7%). As a result, One Store’s shareholding structure was reorganized to telecom companies (53.9%), Naver (26.3%), and financial investors (18.6%). This marks the birth of a K app market with major domestic ICT companies such as the three telecom companies and Naver as shareholders. Previously, the shareholding structure was SK Telecom (52.1%), Naver (27.4%), and financial investors (19.4%).

One Store, launched in 2016, is a leading domestic app market. The three telecom companies and Naver integrated their separately operated T Store, Olleh Market, U+ Store, and Naver App Store into One Store and continued cooperation such as membership discounts. However, apart from business cooperation, KT and LG Uplus did not invest shares in One Store at its launch, as there was no reason to strengthen a key subsidiary of their competitor SK Telecom in the mobile telecommunications market. Naver, on the other hand, became the second-largest shareholder by investing shares shortly after the launch.

However, with KT and LG Uplus investing in One Store shares after five years, it is expected that a full-fledged K app market led by the three telecom companies will be nurtured. One Store also plans to establish a joint responsibility management system. Lee Jaehwan, CEO of One Store, emphasized, “With the two telecom companies who have been joint business partners for the past five years now participating as shareholders, a higher level of cooperation is expected,” adding, “We will become Korea’s representative app market that coexists with the industry and provides greater benefits to users.”

◆Consensus on "Nurturing Native App Market"

The main reason KT and LG Uplus decided to invest in shares this time is the urgent need to secure the competitiveness of the native app market. This follows Google Play’s recent declaration to take a whopping 30% app commission, intensifying the so-called ‘app toll’ controversy last year. This not only increases the cost burden on app developers, threatening their survival, but also inevitably leads to increased charges for consumers.

Above all, the three telecom companies share the view that they must nurture a native app market capable of competing against overseas platforms to strengthen the domestic ICT ecosystem. In particular, the Google ‘app toll’ controversy confirmed that a platform company with a dominant market position can shake the industry ecosystem simply by changing its policies. As of August last year, Google Play’s share of the domestic app market was 71.2%, far surpassing One Store’s 18.3%.

Following the app toll controversy, inquiries from companies considering the native platform One Store as an alternative have been increasing, influenced by the three telecom companies’ actions. One Store’s app commission is currently 20%, much lower than Apple and Google’s 30%. It also does not force in-app payments, which have become an industry norm. Rather, since July 2018, it has implemented a groundbreaking policy reducing commissions to 5% if developers use their own payment systems. Experts agree that such a market structure, where platform companies can lower commissions through competition, is necessary.

◆One Store Ahead of IPO, Growth Expectations

KT and LG Uplus are reportedly optimistic about One Store’s growth potential. One Store is planning an initial public offering (IPO) this year. Last year, it succeeded in turning a profit for the first time since its establishment. With transaction volume rising for ten consecutive quarters, the year-on-year transaction growth rate reached 34.4%. This is nearly double the growth rate of overseas app markets such as Google Play (18.9%), which have been criticized for app toll abuses.

The securities industry values One Store’s corporate value at around 1 trillion KRW. One Store’s monthly active users (MAU) number approximately 15.4 million, and the total content downloads to date have reached about 500 million.