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| Google's logo is seen at Google's Startup Campus in southern Seoul in this Sept. 15, 2021 file photo. Yonhap |
On March 16, Google instructed local app developers to remove their own payment systems, such as external payment links, from their apps, saying the developers wouldn't be able to submit software updates for their apps starting April 1. Google added that any app makers failing to satisfy the new policy by June 1 could be kicked out of its Google Play store.
The announcement can be read as a counter response to the country's law that prohibits app store operators such as Google and Apple from forcing app developers to use only their in-app payment systems.
To curb the market dominance of big tech companies, the National Assembly passed an amendment to the Telecommunications Business Act in 2021 and the revised law took effect on March 15.
In-app payment refers to the internal payment system of an app store. As Google does not allow external payment methods, domestic app service providers are set to use Google's in-app payment system and consequently pay Google commissions up to 30 percent.
"Google's action can be interpreted as not complying with the country's laws. Mobile apps need constant software updates to improve service, but if the app store blocks the updates, the app providers will not be able to operate," an official from a local app developer said on condition of anonymity.
Due to Google's new guidelines, local video streaming service providers have raised their monthly subscription fee. On April 1, local streaming service operators such as Wavve and Tving raised their monthly subscription fees by 15 percent if users pay their fees through Google Play. Seezn, another streaming service company, said it will notify customers about whether it will increase fees or not within the first half of this year.
"As Google does not allow external payment methods, streaming service companies have to pay a 15 percent commission to Google if they sell subscription products through Google's in-app payment system. In addition, all technical specifications have to be met by Google, which puts a greater burden on the service providers," an official from a local video streaming company said on condition of anonymity.
In regard to that, the Korea Communications Commission (KCC), which supervises the country's media policies, released an authoritative interpretation on April 5 that Google's in-app payment mandate, which caused the price hikes in service fees, could be an act of forcing a specific payment method.
"The KCC is determined to impose a fine if the violation is found after an investigation," the KCC said in a statement.
Civic groups are calling on the government to take action. "The KCC plans to wait for the occurrence of illegal activities to check for violations," Seoul YMCA, a local civic organization, said in a statement. "However, the damage to consumers is already ongoing."
At a time when app developers are pressured to raise their service fees, the industry expects the locally developed app market ONE store to benefit, as it has a fee rate of 20 percent. ONE store also allows app developers to use external payment systems with a 5 percent commission.
"In order to prevent Google that runs a huge app store from strengthening its monopoly power, it is also a good alternative for more companies to offer their services through ONE store," an official from a local app developing company said on condition of anonymity.
"The more the companies enter the domestic app store, the more rooms can be created that can counter Google's exclusive position."
Market tracker Mobile Index's data showed that ONE store had the second-largest share in Korea's app market with 13.8 percent in 2021. The figure lagged far behind Google's share of 74.6 percent, but outpaced Apple's 11.6 percent.
The Korea Times contacted Google Korea's PR agency on the matter, but it was unable to receive a comment.
