Google and Kakao Under Watch... KCC and Fair Trade Commission 'Closely Monitoring'

In Case of App Deletion, Investigation for Legal Violations Possible
Actions Such as Fines May Follow
JYP Predicts Administrative Litigation Ahead

[Asia Economy Reporter Lim Hye-seon] As Kakao continues to maintain web payment links in violation of Google's in-app payment terms, attention is focused on whether Google will actually delete the KakaoTalk app. The government is also closely monitoring the situation. If Kakao is sanctioned under Google's policy, the government could have grounds to intensify its investigation.

According to the Korea Communications Commission (KCC) on the 7th, if actual damage cases (such as app deletion) occur related to the Google in-app payment issue, the commission plans to recognize the violation of prohibited acts following procedures and initiate fact-finding investigations. At a press briefing on the prohibition of forced in-app payments held last month, the KCC stated, "App deletion must follow valid reasons or prior consent procedures," adding, "If an app is deleted solely because it did not comply with payment policies, it can be considered a violation of the 'unfair deletion of apps' clause in the enforcement decree of the law." The KCC believes that proving this could lead to penalties such as fines or corrective orders. They also mentioned that if unfair discrimination due to policy changes can be proven, sanctions could be imposed. Jeon Hye-seon, head of the KCC's Telecommunications Market Investigation Division, said, "We are closely monitoring the situation."

Since last month, the KCC has also been conducting inspections of app market operators such as Google, Apple, and One Store. If illegal activities are confirmed during this process, the KCC plans to transition to fact-finding investigations according to procedures and proceed with sanctions through committee deliberations and resolutions.

The Fair Trade Commission (FTC) is also keeping a close watch. The FTC has been investigating the unfair trade practices related to Google's mandatory in-app payment policy for over a year since the second half of 2020. At the end of 2020, the FTC conducted an on-site investigation at Google's Korea headquarters and established a dedicated in-app payment investigation team. Since the amendment of the Telecommunications Business Act in September last year granted the KCC direct authority to sanction mandatory in-app payments, the FTC is currently taking a wait-and-see approach regarding the KCC's actions. However, there is speculation that if Google circumvents the Telecommunications Business Act, the FTC could impose sanctions based on provisions of the Fair Trade Act. This is because if Google, which holds a dominant market position, uses its status to force transactions?a form of unfair trade practice?it could be deemed a violation of the Fair Trade Act.

If the government finds legal violations and imposes fines or corrective orders, a prolonged administrative lawsuit with Google is expected. Ahead of the government's moves, a domestic consumer group filed a complaint with the police on the 3rd against Google's forced in-app payment practices. The complaint argues that due to the burden of commission fees, major domestic webtoon, web novel, music, and online video service (OTT) platforms have raised their prices within Android apps, which has resulted in harm to domestic consumers.