Will Google’s '30% App Toll' Be Blocked? Authorities Take Action, but Effectiveness Remains Controversial

[Asia Economy Reporter Seulgina Jo] Although authorities have taken action regarding the so-called 'app toll' controversy, where Google decided to mandate in-app payments and impose a 30% payment commission on all apps like Apple, doubts still remain about the effectiveness of the sanctions. Industry insiders generally agree that there is insufficient basis to consider it illegal, and it is unclear whether extraterritorial application is even possible.

According to related industries on the 29th, the Korea Fair Trade Commission (KFTC) and the Korea Communications Commission (KCC) have begun reviewing whether Google's policy to expand the 30% app commission constitutes prohibited acts under the Monopoly Regulation and Fair Trade Act and the Telecommunications Business Act. The Ministry of Science and ICT has also decided to conduct a survey on app market commission expenditures targeting domestic content providers.

◆Why the App Toll Controversy? Authorities Examine Grounds for Illegality and Sanctions

This move follows Google's decision to expand the 30% commission, previously applied only to game content, to all in-app payments. Like Apple, if Google imposes a 30% commission on all apps, fees for content such as videos, music, and webtoons used by smartphone users with Google's operating system (OS) will inevitably increase by 20 to 30%. This is feared to threaten the survival of domestic app developers and lead to consumer harm.

During the government work report at the National Assembly's Science, ICT, Broadcasting and Communications Committee meeting last month, there were repeated calls for the government to prepare countermeasures regarding Google's commission policy. At that time, KCC Chairman Sang-hyuk Han responded, "The KFTC, Ministry of Science and ICT, and KCC will work together to find alternatives." Minister Ki-young Choi of the Ministry of Science and ICT also acknowledged the need for a survey targeting the domestic industry before responding to questions about data related to app market commissions.

Currently, the KFTC and KCC are reviewing the Fair Trade Act and the Telecommunications Business Act, respectively.

Under the current Fair Trade Act, market-dominant businesses are prohibited from unfairly determining product prices, and violations can result in imprisonment of up to three years or fines up to 200 million KRW. However, applying the Fair Trade Act to Google inevitably raises fairness issues since Apple has already imposed a 30% commission on all apps. Apple has enforced mandatory in-app payments since 2011 without facing special regulations.

An industry insider shook their head, saying, "It is also unclear whether the extraterritorial application of domestic Fair Trade Act to overseas corporations like Google Korea or Apple Korea is possible." There is concern that regulating global IT companies in this process could escalate into international trade disputes. Both Google and Apple apply the same global policies regarding commissions.

The Telecommunications Business Act, which the KCC is examining, prohibits telecommunications operators from imposing unreasonable or discriminatory conditions and allows imposing fines up to 3% of sales for violations. However, this law mainly addresses issues related to user benefits, so it is somewhat distant from the current app commission issue.

Moreover, the KCC states that since Google has not yet introduced the new commission policy, it is difficult to start an investigation immediately. Previously, the KCC announced guidelines for app market mobile content payments, but these lack legal enforceability.

◆Industry Welcomes Joint Response Despite Concerns Over Effectiveness

The industry expresses doubts about the effectiveness of sanctions but welcomes the authorities' actions. Especially for application providers offering individual services, it is difficult to oppose the app market giants for fear of retaliation, so the joint movement by related ministries is seen positively.

Google Play Store and Apple App Store account for nearly 90% of the domestic market. One insider lamented, "In a monopolistic market, mandating only in-app payments and imposing a 30% commission is unfair," but added, "Just as Apple removed Epic Games from the App Store for opposing the commission policy, app developers can be expelled from the app market at any time."

Professor Jeonghwan Kim of the Department of Journalism and Broadcasting at Pukyong National University presented results on the 27th at a related seminar after interviewing 12 domestic content and game companies. He pointed out, "Business operators seemed unaware of how other companies contract with Google. In a way, Google appears to strategically exploit the 'prisoner's dilemma' (a social behavior theory referring to a situation where accomplices in separate interrogation rooms do not know each other's statements)."

He added, "Unlike Apple, Google, which has secured its market position by advocating an open policy, should approach this issue responsibly," and suggested, "The KFTC should also investigate issues such as Google's pre-installation of its own apps, and a cooperative operation among related ministries is necessary."

The National Assembly is also taking action. On the 12th, Representative Seongjoong Park of the United Future Party introduced a partial amendment bill to the Telecommunications Business Act prohibiting app store operators from arbitrarily imposing commissions. The bill aims to define forcing specific payment methods by app market operators as a prohibited act. At the end of July, Representative Jeongmin Hong of the Democratic Party proposed an amendment to prevent app market operators from abusing their bargaining position to impose unfavorable contracts.

This content was produced with the assistance of AI translation services.