Google to Enforce Mandatory In-App Payment Policy from April 1
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[Asia Economy Reporter Minyoung Cha] Since this month, Google has been enforcing a mandatory in-app payment policy (using the app market operator's payment system) by circumventing the so-called 'Google Gapjil Prevention Act (Amendment to the Telecommunications Business Act),' making urgent countermeasures necessary. The Korea Communications Commission (KCC) has stated it will proceed with steps sequentially, but civic groups are criticizing, saying "consumer damage is already occurring."
According to the related industry on the 11th, the global app market operator Google has implemented a policy from the 1st of this month 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 to web pages.
On the 5th, the KCC issued an authoritative interpretation stating that "Google's mandatory in-app payment (using the app market operator's payment system) may constitute 'forcing a specific payment method' under Article 50, Paragraph 1, Item 9 of the Google Gapjil Prevention Act." Since the 1st of this month, Google has enforced the in-app payment policy by banning outlinks within apps that induce external payments. This effectively forced app developers to use the in-app payment system.
The KCC plans to verify violations through on-site inspections and convert to fact-finding investigations if violations are confirmed. A KCC official said, "It is unusual that the KCC preemptively stated there is a possibility of 'illegality' just because Google issued a policy," adding, "Rather than just waiting for reports, we will conduct on-site inspections and actively combine awareness investigations." KCC Chairman Sanghyuk Han also showed a cautious attitude when asked about Google's potential legal violations and measures, saying, "Even if we see a possibility of illegality, there must be an act to take action."
During fact-finding investigations, if orders to resubmit materials or corrective orders such as cessation of prohibited acts are not followed, the KCC plans to actively impose enforcement fines under the recently amended Telecommunications Business Act. To collect and analyze cases of app developer damages, the KCC also plans to open an 'App Market Unfair Practice Damage Report Center.' For identified damage cases, an 'App Market Damage Relief Support Group' composed of external experts in legal and technical fields will be formed.
On the other hand, civic groups are calling for proactive measures before consumer damage increases. Seoul YMCA issued a statement saying, "The KCC plans to wait for illegal acts to occur, verify violations through on-site inspections, and convert to fact-finding investigations upon confirmation," but "consumer damage is already ongoing." In fact, as Google enforced the in-app payment policy, some online video services (OTT) and music streaming companies have raised fees by about 15%. There are also cases urging users to access via PC.
Seoul YMCA argued, "While regulations fail to catch up with the crafty acts of giant monopolistic businesses and only chase after them, consumer damage is steadily accumulating," adding, "Even during the procedural progress, damage to consumers and app market users will continue to grow." They also urged the KCC to take preemptive action against foreign operators who evade domestic laws and disrupt market order. They also called on the National Assembly to speed up the handling of the April extraordinary session.
Meanwhile, the possibility that Google will readily admit to illegal acts is currently low. Google is currently arguing that it is not illegal by claiming it allowed external payments by 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 fees in Korea reaches 850 billion KRW. With the new payment policy in place, revenue is estimated to exceed 1.3 trillion KRW.
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