If Early, Next Week 'Google Commission Abuse Prevention Act' to Be Released... Science and ICT Committee Discusses Holding 2nd Subcommittee

[Image source=Yonhap News]

[Asia Economy Reporter Seulgina Jo] The amendment to the Telecommunications Business Act aimed at blocking Google, the 'app market giant,' from enforcing a 30% commission fee is set to be actively pursued as early as next week. In place of the Google Korea representative who did not attend the National Assembly audit due to the spread of COVID-19, there is also discussion about summoning Executive Director Jaehyun Lim, who holds a power of attorney from the headquarters, to testify at the comprehensive audit at the end of this month.

The National Assembly's Science, Technology, Information and Broadcasting and Communications Committee (STIBC) agreed on the 8th in a morning negotiation between ruling and opposition party secretaries to pass an amendment to the Telecommunications Business Act within the October session, focusing on preventing abuse of power by app market operators. Accordingly, the Information and Communications Broadcasting Bill Review Subcommittee (Subcommittee 2) is likely to be held on the 14th or 21st.

◆ Practical Task Force Activated... Unusually Holding Subcommittee 2 During Audit

It is very unusual to hold a subcommittee and proceed with legal amendments during the audit period. This reflects the National Assembly's judgment that the abusive commission fee practices by Google, which holds a 70% market share as the 'app market giant,' will have a significant negative impact on the domestic ecosystem.

Previously, Google announced that starting next year, app developers listed on Google Play will be forced to use Google's payment method (in-app payment) when selling content or items, and Google will take a whopping 30% commission in this process. Unlike Apple’s App Store, which had applied commission policies only to games, Google expanded this policy to all content and apps. This threatens the survival of domestic app developers and raises concerns about price increases for major content such as webtoons and music.

Jo Seung-rae, the ruling party secretary of the STIBC from the Democratic Party of Korea, said, "It has been agreed to take firm measures on the forced in-app payment by global operators like Google even during the audit," adding, "A practical task force will be formed and operated during the audit period to create a committee alternative that integrates bills currently proposed by five lawmakers including myself, Park Sung-joong, Han Jun-ho, Hong Jung-min, and Yang Jung-sook."

The practical task force consists of secretaries from each party, expert committee members, and STIBC professional staff. It will finalize a committee alternative through an integration process centered on existing bills aimed at preventing abuse by app market operators. The main bills expected to form the core are ▲ Park Sung-joong of the People Power Party’s amendment prohibiting app market operators with monopolistic status from forcing specific payment methods, and ▲ Jo Seung-rae’s amendment granting the Korea Communications Commission authority to inspect compliance and issue corrective orders to app market operators.

An STIBC official explained, "The practical task force will present an integrated bill with strong safeguards based on already proposed bills," adding, "There is a consensus that Google's enforcement of in-app payment and the 30% commission is an abuse of market dominance." The bill will be submitted sequentially through Subcommittee 2, the full STIBC meeting, the Legislation and Judiciary Committee, and then the National Assembly plenary session.

At the same time, a resolution urging the Ministry of Science and ICT, the Korea Communications Commission, and the Fair Trade Commission to prepare countermeasures is also being promoted by the STIBC.

◆ Considering Witness Adoption... Likely to Increase Pressure on Google

The STIBC is currently considering adopting a Google Korea official as a witness at the comprehensive audit scheduled for the 22nd-23rd, which covers the Ministry of Science and ICT and the Korea Communications Commission. Nancy Mable Walker, the originally adopted witness and Google Korea representative, was absent from the audit the day before. Consequently, the possibility of John Lee, a Korean-American president overseeing sales and marketing in Korea, attending was raised but did not materialize.

This is partly because John Lee, who had testified multiple times during the 20th National Assembly, was criticized by public opinion for consistently responding with "It is under headquarters’ jurisdiction, so I do not know well" and "It is beyond my authority to speak." There are concerns that it would be difficult to expect responsible answers and that lengthy interpretation could turn the session into a 'recording playback' scenario again.

The person under consideration for witness adoption by the STIBC is Executive Director Jaehyun Lim of Google Korea. Lim is also being considered as a witness in the National Assembly’s Political Affairs Committee over issues such as Google app commissions and YouTube undisclosed advertising controversies. However, there are concerns that Lim may have limitations in answering due to lack of legal representation. An STIBC official said, "We will prepare supplementary measures such as requiring him to bring a power of attorney for certain questions."

◆ U.S. Congress Also Points Out 'Monopoly'... Support from National Assembly, Industry, and Government

In particular, this movement is expected to gain momentum in conjunction with the U.S. Congress's public raising of monopoly issues concerning the Big Four?Google, Apple, Facebook, and Amazon. After a 16-month investigation, the report released on the 6th (local time) by the U.S. House Judiciary Committee’s Antitrust Subcommittee included findings that these Big Four companies abuse their dominant market power and require regulation and dismantling.

At the audit the previous day afternoon, Jo Seung-rae mentioned the report, saying, "There may be various trade and other issues in regulating global operators, but since the analysis is like this even within the U.S., there is no need to be discouraged," urging the government to respond proactively. Yoon Young-chan, a Democratic Party lawmaker, also called on the Korea Communications Commission to create a task force with the Fair Trade Commission, National Tax Service, and Ministry of Science and ICT to respond to Google’s forced in-app payment issue. The ongoing investigation by the Ministry of Science and ICT is also expected to conclude by the end of this month.

The industry views these developments as significant pressure on Google, which is enforcing the 30% commission policy. Google has agreed to postpone the 30% commission and forced in-app payment policy in India until 2022. According to Han Jun-ho of the Democratic Party, this was influenced by an unofficial coalition of over 150 Indian startups responding collectively. India is the world’s second-largest internet market and the largest market for Google Play, although its revenue is less than that of South Korea.

Meanwhile, a survey conducted by Jeon Jae-soo of the Democratic Party’s office in cooperation with the Consumer Rights Forum showed that 84% of respondents consider Google’s expansion of in-app payment policy 'excessive.' Only 16% responded that it was 'appropriate.' Additionally, 90.5% of respondents predicted that Google’s moves would lead to future consumer price increases.

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 deal a significant blow to South Korea’s internet ecosystem and will not benefit the app market either."

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