Despite Google's Official Half-Price Commission, Domestic IT Industry Remains 'Cold'

In-App Payment Fees for Digital Content Reduced from 30% to 15%
Including Naver, Kakao, and Others

[Asia Economy Reporter Buaeri] Since Google announced its ‘in-app payment’ policy last year, which mandates the use of its own payment system, conflicts with the domestic IT industry have persisted for a year. The domestic IT industry has also responded coldly to Google’s proposal to reduce commissions on digital content such as webtoons and music from the existing 30% to 15%.

"Google's commission reduction is just a smokescreen"

Google, which will apply the in-app payment policy from October, officially announced on the 24th that it will reduce the payment commission for digital content related to books (including webtoons), videos, and audio to 15%. Naver, Kakao, and others, who were previously excluded from the commission reduction, are also included.

The Korea Internet Corporations Association (KICA), which includes Naver and Kakao, stated that this measure is a ‘smokescreen’ that obscures the essence of the issue. The core issue is the mandatory in-app payment, and they argue that the commission reduction is diverting attention. Moreover, having to pay a 15% commission, which they originally did not have to pay, is still a burden.

Kwon Se-hwa, Policy Director of KICA, criticized, "Google is playing the media game with just the commission issue," adding, "If it is a commission for payment methods, it should be at the level of 1-3% like credit card payment gateway (PG) companies, but 15% is still a robbery that plunders and destroys the domestic content ecosystem." Another industry official also said, "Google is trying to divert attention," emphasizing, "The problem is not the commission reduction but the mandatory in-app payment itself. Autonomy over other payment methods besides in-app payment should be granted."

This conflict began in June last year when Google announced ‘Billing Library V.3’, which requires the use of its own payment method (in-app payment) for digital content purchases and imposes a 30% commission on the payment amount. This expanded the policy, which was previously applied only to games, to the entire digital content sector including webtoons and music. In August of the same year, KICA responded by filing a complaint with the Korea Communications Commission against Google’s U.S. headquarters and Google Korea for violations of the Telecommunications Business Act. However, in September, Google formalized the policy. From then on, a full-scale confrontation with Google began. Facing strong industry backlash, Google postponed the application timing and offered a ‘carrot’ by reducing the commission to 15% for businesses with sales under $1 million, but the controversy did not subside.

‘Google Gapjil Prevention Act’ Discussions Gain Momentum

Legislation on the Google Gapjil Prevention Act, which had been stalled, is expected to gain momentum again, led by the ruling party. On the morning of the same day, the Democratic Party submitted a request to refer the bill to the Agenda Coordination Committee before the start of the full meeting of the Science, Technology, Information and Broadcasting and Communications Committee. A Democratic Party official explained, "Since it is a situation where the bill needs to be processed quickly, and Park Seong-jung, a member of the People Power Party who chairs the subcommittee, is not holding the bill subcommittee, this is a forced measure."

The amendment to the Telecommunications Business Act, known as the Google Gapjil Prevention Act, contains provisions that prohibit app market operators from forcing specific payment methods. Currently, seven bills have been submitted by lawmakers from both ruling and opposition parties to the Science and Technology Committee. According to current National Assembly law, bills approved by the Agenda Coordination Committee are considered to have passed the subcommittee review. The Democratic Party insists on speeding up the Google Gapjil Prevention Act. The opposition party is delaying discussions, citing Korea-U.S. trade issues as an excuse.

Jo Seung-rae, the ruling party’s floor leader and Democratic Party lawmaker, said that they received a letter from the U.S. App Fairness Coalition and Match Group opposing Google’s in-app payment policy, stating that "similar bills are being promoted in many U.S. states and at the federal level, and the Joe Biden administration is aware of the side effects caused by the deepening monopoly of giant IT companies," dismissing the possibility of Korea-U.S. trade issues. Jo emphasized, "To create a fair digital ecosystem, the Google Prevention Act under discussion in the Science and Technology Committee must be processed quickly."