Google In-App Payment Workaround Measures Implemented on the 1st
Broadcasting Commission Expected to Announce Next Week Despite Predictions This Week
[Asia Economy Reporter Cha Min-young] Regarding Google's ban on payments through external links (outlinks) for application (app) developers, the Korea Communications Commission (KCC) has postponed the announcement of its authoritative interpretation results to next week. The plan is to announce the results after reviewing the legality and the follow-up measures for global app market operators.
A KCC official stated on the 1st, "We have set an internal policy to announce the authoritative interpretation results together with the follow-up measures after reviewing the direction, rather than just distributing the interpretation results alone." Since Google's mandatory in-app payment ban took effect on this day, it was expected that the announcement would be made by this day at the latest, but the timing has been somewhat delayed.
The KCC has expressed its intention to take action to members of the National Assembly's Science, Technology, Information and Broadcasting and Communications Committee. On the 30th of last month, KCC Chairman Han Sang-hyuk said at the National Assembly's full committee meeting, "We will review and take maximum measures," adding, "If there is illegal activity by (Google), an investigation should be conducted and sanctions should follow."
If the KCC determines illegality, it will proceed to fact-finding investigations. The KCC recently approved a partial amendment to the Telecommunications Business Act to impose enforcement penalties on operators who fail to comply with government orders to submit fact-finding investigation materials more than twice. The enforcement penalty calculation standard is 0.1% to 0.2% of the average daily sales. In cases where sales calculation is difficult, an enforcement penalty of up to 2 million KRW per day is imposed. Additionally, if an operator refuses to cooperate with the fact-finding investigation regarding prohibited acts, a fine of up to 50 million KRW must be paid.
The possibility that Google will readily admit to illegal facts is currently low. Google is currently arguing that it is not illegal by allowing external payments for app developers besides in-app payments, so there is a high possibility that this will escalate into administrative litigation in the future.
It is estimated that Google's annual revenue from in-app payment commissions in Korea reaches 850 billion KRW. If the new payment policy is implemented, revenue is estimated to easily exceed 1.3 trillion KRW. Assuming Google pays a 2% fine, the fine would be around 26 billion KRW, but revenue would still exceed 400 billion KRW.
Starting today, Google is enforcing a policy that prevents apps that do not comply with its payment policy from submitting updates. If non-compliance continues until June 1, Google may also delete the app from Google Play. Google has only allowed app developers to use in-app payments or third-party payment methods within the in-app payment system and has prohibited payments made through external links on web pages.
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