Google, While Forcing In-App Payments in Korea... Allows External Payments in Japan and Europe

Trial Approval of External Payment Systems in Japan and Europe
Contrasting with Forcing Own Payment System in Korea

On June 9, 2022, a visitor wearing a hat is moving near the Google booth installed at an information technology (IT) event held in Berlin, Germany. [Image source=Yonhap News]

[Asia Economy Intern Reporter Kim Nayeon] Google, which has been criticized for virtually forcing its own payment system on users of smartphone applications (apps) in South Korea, has decided to experimentally allow external payment systems in Japan, Europe, and other regions.

On the 3rd, Japan's Yomiuri Shimbun reported that Google announced on the 1st (U.S. local time) its policy to experimentally permit the introduction of payment systems other than Google’s in smartphone apps in Japan and Europe.

According to the report, companies developing apps targeting users in Japan, various European countries, Australia, India, and Indonesia will be able to adopt external payment systems instead of Google’s, but South Korea was not included in the countries allowed under this announcement.

Google has so far required the use of its own payment system citing user protection, but with this measure, app users are expected to be able to choose their payment methods.

According to Nihon Keizai Shimbun, under this measure, if an external payment method is chosen, the commission fee that app developers pay to Google will be reduced by 4 percentage points.

Companies that previously paid 15% will now pay 11%, and those that paid 30% will pay 26%, respectively.

Takamasa Kishihara, Executive Director of the Mobile Content Forum, pointed out, "While the introduction of external payments is welcome, the commission rates have not been significantly lowered."

This measure contrasts with the situation in South Korea, where Google has been criticized for virtually forcing its own payment system. South Korea has established regulations prohibiting app market operators from forcing their own payment systems, but Google has taken countermeasures to undermine this, causing conflicts with regulatory authorities.

In South Korea, the Telecommunications Business Act clause (known as the 'In-app Payment Mandate Prohibition Clause'), which prohibits app market operators like Google or Apple from abusing their position to force specific payment methods, came into effect in September last year.

Additionally, the 'Criteria for Judging the Illegality of Prohibited Acts by App Market Operators' (a notice by the Korea Communications Commission), which specifies detailed application standards of this law, was implemented in March this year.

However, Google set a deadline of April 1 this year to delete web page links (outlinks) that guide users to external payments and notified app developers participating in its app market, the Play Store. Google pressured that apps not complying by June 1 would be removed from the Play Store.

When Kakao did not delete the outlink, Google halted the update of the new version (v.9.8.6) of KakaoTalk on the Play Store, released on June 30 this year. The Korea Communications Commission is investigating Google’s actions, considering that they may effectively constitute forcing a specific payment method (Google’s own payment system).