"Google's Trick" KCC: "Decision on Illegality Next Week, Considering Fine Imposition"

[Asia Economy Reporter Lim Hye-seon] The Korea Communications Commission (KCC), the main regulatory body, has taken action against Google's in-app payment loophole controversy. After Google claimed to comply with the 'In-App Payment Mandatory Prohibition Act' (Amendment to the Telecommunications Business Act), which came into effect on the 15th, it devised a workaround to induce in-app payments. The KCC has stated that it will clearly investigate the possibility of legal violations.

According to the KCC on the 24th, the Communications Market Investigation Division recently informed Google to improve its app market operation method due to the possibility of illegal acts restricting payments. The KCC plans to complete a legal interpretation next week and determine whether there has been any illegal activity. If Google does not change its payment policy despite proven illegality, the KCC intends to take strong legal measures.

In-app payment is a method where companies like Google and Apple require paid app content to be purchased only through their internally developed payment systems. The In-App Payment Mandatory Prohibition Act prohibits app markets from forcing in-app payments. Violations can result in fines of up to 2% of domestic sales. If in-app payment is still forced despite fines, additional enforcement fees and penalties must be paid.

Earlier, Google announced in November last year that it would allow 'third-party payments' only in South Korea. However, on the 18th, Google notified that according to Google Play's payment policy, app developers will only be allowed to use Google Play in-app payments or third-party payments within in-app payments. Google stated that if this policy is not followed, app updates will be blocked from April, and from June, the app will be removed entirely from Google Play.

Google has charged up to a 30% payment processing fee when using its own in-app payment method. Recently, it also allowed third-party payment processing through this system, but the fee in this case is 26%. Considering payment processing companies and card fees, this actually results in a loss, effectively inducing in-app payments by Google.

Google's position is reportedly that it is not violating the law because it allowed developer-provided payments within the app. However, the KCC views this as ignoring the purpose of the law. A KCC official said, "We believe that Google's refusal to allow out-link payments has the potential to be illegal," adding, "We will conduct a thorough fact-finding investigation."