Dispute Over Google's In-App Payments: "Unfair Practice" VS "Fair Compensation for Intermediary Transactions"

Fair Trade Commission-Korea University ICR Center Joint Forum

[Sejong=Asia Economy Reporter Joo Sang-don] On the 6th, at an academic forum jointly hosted by the Fair Trade Commission and Korea University’s ICR (Innovation, Regulation, and Competition Law) Center, opposing views clashed over Google’s mandatory in-app payment system, with one side criticizing it as an 'abuse of market dominant position and unfair trade practice,' and the other defending it as a 'normal act of charging fees for intermediary transactions.'

At the forum held in the meeting room of the Korea Fair Trade Mediation Agency, Professor Lee Hwang of Korea University Law School, who participated as a presenter, argued that since the transaction through the app market ends the moment a user downloads an app, in-app purchases should be considered transactions outside the app market domain. Professor Lee stated, "Consumer app purchases are divided into 'paid app purchases,' which involve downloading paid apps from the app market, and 'in-app purchases,' which involve buying paid content within the downloaded app." From this perspective, he evaluated that it is unfair for the app market operator to force its own payment system even on in-app purchases, which are transactions outside the app market domain. He judged Google’s in-app payment as an abuse of market dominant position through tying sales and exclusive dealing, violating the Monopoly Regulation and Fair Trade Act that prohibits abuse of trading position.

On the other hand, Professor Joo Jin-yeol of Pusan National University Law School judged that the in-app payment system is a legitimate means to prevent free-riding by app developers and to collect fees for intermediary transactions. He expressed concern that prohibiting such fee collection would threaten the existence of intermediary transaction platforms and lead to the collapse of the app market ecosystem. He also pointed out that concrete evidence is needed to prove whether Google’s actions exclude other app market operators and thus restrict competition.

The Fair Trade Commission plans to use the various expert opinions raised at this forum as reference materials for future law enforcement and institutional improvements.