KCC Judges Potential Violations of Prohibited Acts by 3 Major App Markets
Conflict Between Google and KakaoTalk Surfaces Amid Developers' Hesitation
[Asia Economy Reporter Cha Min-young] The Korea Communications Commission (KCC) has determined that the three app market operators?Google, Apple, and One Store?violated the so-called 'In-App Payment Mandatory Prohibition Act (Amendment to the Telecommunications Business Act)' and will escalate from a compliance inspection phase to a fact-finding investigation. The market views the recent conflict between Google and KakaoTalk last month as the decisive factor. Due to developers being cautious of app market operators, it has been difficult to secure concrete cases of violations. However, the conflict brought Google’s abusive practices to light, providing the government with grounds to proceed with a fact-finding investigation.
KCC Initiates Fact-Finding Investigation on All Three App Market Operators
The Korea Communications Commission announced on the 9th that starting from the 16th, it will begin a fact-finding investigation targeting the three app market operators (Google, Apple, and One Store) to verify violations of prohibited acts by app market operators, such as forcing specific payment methods.
Since May 17, the KCC has been conducting a compliance inspection to determine whether the three companies violated the amended Telecommunications Business Act, and as a result, the KCC judged that all three potentially violated prohibited acts.
The KCC stated that the three companies allow only specific payment methods (internal payments) under restrictive conditions and control, and that refusing app registration or renewal for apps using other payment methods (external payments) may constitute forcing a specific payment method. It also found issues with the app review process, such as Google and Apple not notifying app developers of the app review period or specific reasons for delays.
The KCC said, "Through this fact-finding investigation, we will clearly determine whether such acts constitute forcing a specific payment method. If it is judged that violations such as forcing a specific payment method have occurred, we plan to take measures such as corrective orders or imposing fines."
Google-KakaoTalk Conflict Seen as Decisive Clue
The market sees the early July conflict between Google and KakaoTalk as a decisive clue. Last month, the latest Android version (v9.8.5) of KakaoTalk failed to pass Google's review, resulting in an inability to update. This was because Kakao opposed Google's in-app payment policy implemented from June. Google allowed third-party payments within apps in addition to its own in-app payments but prohibited outlink payment methods and warned that violations could lead to removal from the Google app market. It also banned expressions that guide or encourage web payments.
After the in-app payment policy was enforced, KakaoTalk posted a notice within the app stating, "You can purchase cash at the same price as before by using the web," and included an outlink to a web page. In fact, Kakao raised the price of KakaoTalk Emoticon Plus on Google Play from the previous 4,900 KRW per month to 5,700 KRW per month, while selling it on the web page for 3,900 KRW per month.
As the conflict between the two companies escalated and concerns over consumer harm grew, the KCC intervened directly as a mediator. Subsequently, Kakao, which had opposed Google's mandatory in-app payment policy, took a step back on the 13th of last month. Kakao deleted the outlink notice from the KakaoTalk app, and Google allowed the KakaoTalk app update on Google Play.
Although the conflict has been resolved for now, the KCC judged that Google's actions against Kakao violated the law. It viewed Google's refusal of web payment outlinks as inducing the use of a specific payment method and found that the app review was unjustifiably delayed.
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