[2020 National Audit] Starting Today... Will the National Assembly Stop Google's '30% Commission' Abuse?

[Asia Economy Reporter Seulgina Jo] The biggest issue in the ICT sector during the National Assembly audit starting on the 7th is the controversy over Google’s commission fee abuse, as the 'app market giant' holds a 70% share of the domestic market.

Especially since Google officially announced the enforcement of its app commission fee policy at the end of September ahead of the audit, it is expected that members of the National Assembly’s Science, ICT, Broadcasting and Communications Committee will raise related questions during the audit. Jo Seung-rae of the Democratic Party and Park Sung-joong of the People Power Party, the committee’s floor leaders, recently pointed out unfair practices by app market operators as the most closely watched issue.

Previously, Google decided that starting next year, app developers listed on Google Play will be required to use Google’s payment method (in-app payment) when selling content and items, and Google will take a 30% commission in the process. Unlike Apple’s App Store, which has applied this commission policy only to games so far, Google is expanding it to all content and apps.

As a result, not only will the burden on app developers increase, but consumers are also expected to face direct price hikes for content. For example, the price of one Naver Webtoon usage ticket (cookie) is 100 won on Google Play and 120 won on Apple App Store. However, due to Google’s commission policy change, from next year, the prices consumers pay for webtoons, music, e-books, and video subscription services are expected to rise to Apple App Store levels. The industry is protesting that the 'app market giants,' which are practically monopolies, forcing such payment methods is itself a violation of the law.

However, it is uncertain whether the National Assembly can put a brake on Google’s commission policy.

Nancy Mable Walker, the head of Google Korea who was included in the witness list for the audit, previously submitted a letter of absence. Instead, John Lee, who oversees advertising sales and marketing in Korea, was expected to attend, but concerns arose that he, who is neither a CEO nor a registered director, would find it difficult to provide responsible answers. John Lee has appeared several times at the audit during the 20th National Assembly but consistently responded with ignorance, saying things like "It is under the headquarters’ jurisdiction, so I don’t know," which sparked controversy. The National Assembly is also considering a video audit with Nancy Mable Walker, but this is also expected to be difficult.

Moreover, there are criticisms that there is insufficient basis to view Google’s commission policy change as illegal, and it is unclear whether it applies extraterritorially. To apply the Fair Trade Act violation to Google, fairness issues with Apple, which already imposes a 30% commission on all apps, are inevitable. Apple has enforced in-app payments since 2011 without special regulation. Rather, there are concerns that regulating global IT companies in this process could escalate into international trade issues. Both Google and Apple apply the same global policy regarding commissions.

Currently, the National Assembly is closely examining issues such as Google forcing a specific payment method and unjustly delaying app reviews, judging these as unfair practices using superior bargaining position. Lawmakers Park Sung-joong, Jo Seung-rae, and Hong Jung-min have each proposed amendments to prevent app market operators from abusing their transactional position to engage in unfair practices.

There are also claims that domestic game, portal, and IT startup sectors, as the weaker party, must actively respond to the 'app market giant' Google. Democratic Party lawmaker Han Jun-ho introduced the case of India, citing a report from the IT media TechCrunch the day before, saying, "It is not the time for each developer to just watch Google’s moves."

According to Han, Google has currently decided to postpone the 30% commission and mandatory in-app payment policy in India until 2022. It is known that this postponement decision was influenced by an unofficial coalition of more than 150 Indian startups responding together. India is the world’s second-largest internet market and the largest market for Google Play, but its revenue is less than that of South Korea.

Han’s survey of 771 apps operated by central government ministries, public institutions, and local governments found that 757 apps, or 98%, were registered on Google Play, while only 196 apps, or 25%, were registered on the domestic app market One Store.

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