Mandatory In-App Payments from Tomorrow
Concerns Over Play Store Removal
App Developers 'Surrender' to Price Hikes
[Asia Economy Reporter Lim Hye-seon] Starting tomorrow, applications (apps) that do not comply with Google's in-app payment policy will be removed from the Play Store. Google has already banned updates to apps that include outlinks connecting to external payment pages on the Play Store since last month.
App Removal from June 1
According to industry sources on the 31st, Google will enforce a policy that effectively mandates in-app payments starting next month on the 1st. In-app payments are transactions made using payment methods registered to the user's account on app market platforms such as Google or Apple. Google has notified app developers that they cannot register their apps on the Play Store unless they use in-app payments with a maximum commission fee of 30%, or build a third-party payment system within the in-app payment system (with a 26% commission). This circumvents the amendment to the Telecommunications Business Act (known as the Google Gapjil Prevention Act), passed by the National Assembly last year, which prohibits app market operators from forcing in-app payments.
App developers and content creators have opposed this, and the regulatory agency, the Korea Communications Commission (KCC), has also launched an investigation, stating that there may be violations of the enforcement decree. The KCC is also receiving reports of unfair practices in app marketplaces. Jeon Hye-seon, head of the Communications Market Research Division at the KCC, said, "Even if Google provided two payment methods, if sufficient choice was not guaranteed from the developer's perspective, it can be seen as not providing a real choice."
Google +410 Billion KRW, Consumers -230 Billion KRW
App developers quickly surrendered and raised prices in line with Google's policy, passing the commission burden onto consumers. Although the KCC has expressed intentions to impose sanctions, an app developer representative lamented, "There are practically no content companies that can defy Google and endure losses from app deletion." This is because Google's app marketplace holds over 70% market share. Domestic online video service (OTT) companies such as Giwave and TVing raised the prices of tickets purchased through the Google Play Store by 15%, and Naver and Kakao Webtoon also increased content usage fees by 20%. Music platforms like FLO and VIBE raised streaming service prices by 14-16%.
Due to content price increases, consumer burdens are expected to rise. According to the office of Assemblyman Kim Young-sik, the annual commission paid by app developers (excluding games) to Google is estimated to be up to 833.1 billion KRW due to Google's policy enforcement. Of this, Google could gain approximately 410 billion KRW in additional revenue domestically this year. On the other hand, the additional amount borne by consumers is estimated at about 230 billion KRW annually.
KCC Sanctions? ... Concerns over Administrative Litigation
It is widely expected that if the KCC imposes sanctions such as fines, Google will file administrative litigation against the KCC. If administrative litigation begins, it is likely to become a prolonged battle, during which app developers will need to adopt in-app payments to survive on the Play Store. An industry insider pointed out, "The law should be revised to properly realize the purpose of the Google Gapjil Prevention Act," adding, "We need to create an app ecosystem where everyone can coexist and prosper."
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