[Asia Economy Reporter Kang Nahum] With Google's enforcement of its in-app payment (IAP) policy just one day away, attention is focused on the Korea Communications Commission's (KCC) authoritative interpretation. Although there are penalty provisions such as fines, concerns are rising about the effectiveness of the system, given that the penalties are minimal compared to the profits Google is expected to generate.
According to the KCC on the 31st, an internal review of the authoritative interpretation regarding Google's mandatory in-app payment policy is expected to be announced on the 1st. If the new payment policy is judged to be a violation of the law through this interpretation, the KCC will initiate a fact-finding investigation.
For now, the KCC has prepared minimal legal measures to ensure Google complies with the investigation. The day before, the KCC held a plenary meeting and approved a partial amendment to the Telecommunications Business Act to impose enforcement fines on operators who fail to comply with government orders to submit investigation materials more than twice.
The enforcement fine is calculated at 0.1% to 0.2% of the average daily sales. If it is difficult to calculate sales, an enforcement fine of up to 2 million KRW per day will be imposed. Additionally, if an operator refuses to cooperate with the fact-finding investigation regarding prohibited acts, they must pay a fine of up to 50 million KRW.
If it is finally concluded that Google has violated the law, it must pay a fine of up to 2% of its domestic sales. It is known that Google's revenue from in-app payment commissions in Korea reaches 850 billion KRW annually. Industry estimates suggest that if the new payment policy is implemented, revenue will easily exceed 1.3 trillion KRW. Simply put, even if Google pays a 2% fine, amounting to about 26 billion KRW, it would still generate profits exceeding 400 billion KRW.
This calculation assumes Google admits to the violation willingly. Currently, Google argues that it is not violating the law by allowing external payments by app developers aside from in-app payments, so there is a high possibility that this issue will escalate into administrative litigation.
The National Assembly is also deliberating on this matter. Hong Jung-min, a member of the Democratic Party of Korea who proposed the partial amendment to the Telecommunications Business Act, said, "Detailed design in the enforcement decree is necessary to prevent Google from exploiting loopholes. If there are limits to the enforcement decree, we should consider legal revisions once again."
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