"Google Withholds Network Usage Fees... Annual Amount Estimated at 200?300 Billion Won"

Assemblywoman Choi Sujin Estimates Google’s Network Usage Fee
Naver and Kakao Have Paid About 1.9% of Annual Revenue
"Government Mediation Needed for Legal Revisions and Corporate Contract Negotiations"

An analysis has found that the annual network usage fee that Google is effectively avoiding in South Korea amounts to between 200 billion and 300 billion won.

On October 13, Choi Sujin, a member of the People Power Party, announced that based on her estimates, Google's network usage fee would be 214.7 billion won if calculated from last year's revenue, and 347.9 billion won if calculated based on its share of internet traffic.

Despite holding a 31.2% share of domestic internet traffic as of the end of last year and earning over 11 trillion won in annual revenue, Google has refused to pay a fair network usage fee, leading to ongoing controversy and disputes for several years.

Assemblywoman Choi estimated the scale of Google's network usage fee using her own analysis, which was based on business reports and audit reports from the electronic disclosure system, the Korea Information Society Development Institute (KISDI)'s assessment of competition in the telecommunications market, and media reports regarding network usage fees paid by Naver and Kakao.

According to figures released by Naver through the media in 2017, the company paid 73.4 billion won in network usage fees in 2016, which represented 1.8% of its 2016 revenue of 4.0226 trillion won.

Kakao is also known to have paid about 30 billion won in network usage fees in 2016, which amounted to 2.0% of its 2016 revenue of 1.4642 trillion won.

Applying the average network usage fee ratio of 1.9% (based on Naver and Kakao) to Google Korea's 2024 revenue of 11.302 trillion won, Google's estimated network usage fee would be 214.7 billion won.

According to the "Telecommunications Market Competition Assessment Report" published by KISDI at the end of last year, the revenue from dedicated internet line services in 2023 was 755.8 billion won.

This figure represents the revenue from the 69.4% of the market excluding Google's 30.6% share of internet traffic (as of the end of 2023). By back-calculating, the total market size is estimated at about 1.089 trillion won. Therefore, based on the 2023 traffic share, Google's appropriate network usage fee should have been about 333.2 billion won.

Assemblywoman Choi explained that, excluding Google, the estimated revenue from dedicated internet line services last year was about 767.1 billion won, and based on traffic share, Google's appropriate network usage fee is estimated at 347.9 billion won.

She pointed out, "Paying for network usage is a matter of rational market order, yet Google is leveraging its overwhelming global market dominance to avoid payment and enjoy a free benefit of about 200 billion to 300 billion won annually, which is a textbook case of market failure."

She added, "To address the issue of reverse discrimination against domestic ICT companies, it is essential to revise the 'Network Free-Riding Prevention Act' and for the government to actively mediate contract negotiations between companies regarding network usage fees."