[2020 National Audit] 8 out of 10 Citizens Say "Google's 30% Commission Increase Is Excessive"

[Asia Economy Reporter Seulgina Jo] Eight out of ten Koreans view negatively Google's decision, the 'app market giant,' to enforce a 30% commission fee on all apps and content.

On the 8th, the office of Jeon Jae-su, a member of the Democratic Party of Korea, announced that in an online survey conducted with the Consumer Rights Forum from September 29 to October 5 targeting 1,000 adults, 84% of respondents said Google's plan to expand in-app payments was "excessive." Only 16% responded that it was "appropriate."

90% of Koreans Say "Google's Commission Policy Will Lead to Higher Consumer Prices"

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

90.5% of respondents predicted that Google's move would lead to higher consumer prices in the future.

When asked "What is an appropriate commission rate for content providers in the app market?" the largest share, 41.3%, answered "5-10%." "Below 5%" was 26.1%, and "10-20%" was 20.9%. Only 0.5% said 30% or more was appropriate.

Additionally, 80.4% of respondents expressed willingness to use other payment systems such as app developers' own payment systems.

Jeon Jae-su: "App Commission Issues Should Be Discussed from the User Welfare Perspective"

Jeon Jae-su's office compared consumer prices of the top 15 paid apps excluding games on Google Play and Apple App Store, finding that Apple apps, which currently operate a 30% commission policy, are on average 32% more expensive than Google apps.

Currently, 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, starting next year, prices consumers must pay for webtoons, music, e-books, and video subscription services are expected to rise to Apple App Store levels. This will increase cost burdens on startup developers, threatening their survival and directly impacting consumers.

Jeon stated, "The app payment commission issue should not be viewed simply as a 'power imbalance' between global IT companies and domestic content providers (CPs), but should be discussed from the perspective of user welfare, including consumer usage prices and choice of payment methods for content."

Jo Yoon-mi, co-representative of the Consumer Rights Forum, pointed out, "If the increased commission is passed on to consumers, it will be difficult for small and medium-sized startups to develop diverse content, which will severely damage Korea's internet ecosystem and will not benefit the app market either."

At the National Audit, 'Google Commission Abuse' Criticized... Science and ICT Committee to Propose Integrated Bill

At the National Assembly Science and ICT Committee audit the previous day, there were continuous condemnations over Google's commission abuse controversy, with Google holding a 70% market share in Korea.

Hong Jeong-min, a Democratic Party member, cited a survey by the Korea Internet Information Society, stating, "According to surveys of related professors and institution workers, 83% said Google's 30% commission is unfair. It is an excessive level that startups cannot bear, causing consumer harm and destroying the app ecosystem."

Minister Choi Ki-young of the Ministry of Science and ICT also criticized in response to Hong's question about whether Google's recent announcement of a 100 billion won program to support Korea's digital content ecosystem is sufficient support, saying, "No, I think not in the long term." He agreed with Hong's criticism that Google's support is merely "showmanship."

In this regard, the Science and ICT Committee plans to form a task force centered on lawmakers who have proposed related bills during the audit period to create an integrated committee alternative and respond accordingly. Jo Seung-rae, the ruling party secretary of the committee, said the previous evening, "Regarding the mandatory in-app payment by global operators like Google, it was agreed to take firm measures even during the audit."

Nancy Mable Walker, Google Korea's representative, who was originally scheduled as a witness for the audit, did not attend citing the spread of the novel coronavirus (COVID-19) and other reasons.

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