May 27, 2024

Google & Apple Potentially Face $50.4 MN in Fines In South Korea

Tech giants Google and Apple might be potentially fined more than $50.4 million in South Korea for an alleged breach of the country’s in-app payment laws.

The Korea Communications Commission (KCC) launched a probe into Google Play and Apple’s App Store in 2022 over the enforcement of certain in-app payment methods and suspected irregularities against app developers.

According to the South Korean telecommunication regulator, Apple and Google have unfairly used their market dominance to force local app developers into using their in-app payment methods rather than other alternatives offered by their competitors.

The tech giants have also been accused of delaying app reviews unfairly for the enforcement of specific billing systems.

A Closer Look At Google and Apple’s Alleged Unfair Practices

The KCC issued a statement on Friday, accusing Google and Apple of breaching South Korea’s telecommunications act. The regulator notified both tech giants on the same day, calling their practices “a grave issue” that can significantly hamper competition in the market.

In addition to asking the companies to implement corrective measures, the commission also decided to slap them with hefty fines — 47.6 billion won ($35.4 million) for Google and 20.5 billion won ($1.52 million) for Apple.

South Korea enacted a new telecommunications law in 2021, banning app store owners from forcing app developers to use their dedicated payment systems. This meant app developers would be allowed to offer third-party payment options for in-app purchases.

Both Apple and Google had agreed to abide by the new law. In 2022, app developers targeting the South Korean App Store were asked to submit a separate binary for the use of third-party payment systems.

The penalties will be finalized after the KCC has collected Google and Apple’s responses and carried out other necessary review processes.

In the past, the two app store operators mandated app developers to use only their in-app billing systems, on which they levied a 30% commission.

After South Korea passed the new law banning such rules in 2021, Google and Apple allegedly enforced their in-app payment methods by charging a 26% commission on payments made via external payment systems.

Consequently, the total fees on third-party payment methods grew at par or greater than the 30% commission on in-app billing.

Google was fined 42.1 billion won (nearly $32 million) by South Korea’s Fair Trade Commission (KFTC) earlier in 2023 after the Big Tech company blocked app developers from releasing video games on One Store, a Korean competitor platform.

Google and Apple Refute the Commission’s Allegations

Both Google and Apple have expressed their disagreements with the KCC’s alleged findings.

We have continued to work closely with KCC to demonstrate how we are complying with the new law whilst ensuring that through our alternative billing, we continue to provide a safe and high-quality experience for all.Google Spokesperson

He clarified that the notification submitted by the KCC is only a “pre-notice”, which Google will review and respond to. The company will evaluate its next course of action once the commission shares a finalized written decision.

Apple, too, has released a segment refuting the allegations.

We disagree with the conclusion made by the KCC in their Examiner’s report, and believe the changes we have implemented to the App Store comply with the Telecommunications Business Act. As we have always done, we will continue to engage with the KCC to share our views.Apple

The two tech giants are also facing several lawsuits in the US for abusing their dominance in the market and narrowing the choice of app stores.

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