[2020 National Audit] Science and ICT Committee Targets Google's 'Gapjil'... Inter-Ministerial TF Discussion (Comprehensive)

[Image source=Yonhap News]

[Asia Economy Reporter Bu Aeri] On the 8th, during the National Assembly Science, Technology, Information and Communication Broadcasting Committee’s audit, discussions continued regarding Google's forced in-app payment and the controversy over the 30% commission fee, following the previous day.

"Concerns over Korean companies' dependency on Google... Government should form a TF"

There were calls for the government to form a task force (TF) to comprehensively respond to Google's announcement of forced in-app payments and the imposition of a 30% commission fee policy.

Yoon Young-chan, a member of the Democratic Party of Korea, urged, "Please create a TF that the Fair Trade Commission, National Tax Service, Korea Communications Commission, and Ministry of Science and ICT can respond through."

Yoon pointed out, "Forced in-app payments are not only a matter of user convenience but also a problem where our system becomes dependent on global service providers," adding, "The system dependency of startups and other Korean companies is a significant issue."

He continued, "So far, our government has responded to Google in a fragmented manner," and added, "In-app payments are handled by the Korea Communications Commission, network issues by the Ministry of Science and ICT, and tax issues by the National Tax Service or Fair Trade Commission, so the overall situation is not being viewed comprehensively."

Yoon especially referenced the European government's response and urged Han Sang-hyuk, Chairman of the Korea Communications Commission, to establish a government TF to respond to global giant platform companies.

In response, Chairman Han said, "I will actively express my opinions."

There was also an opinion that an actual condition survey should be conducted regarding Google's unfair practices. Jo Seung-rae, a Democratic Party member, requested the Korea Communications Commission, "You are currently conducting a survey on Google's forced in-app payments; please include aspects related to the 'gapjil' (abuse of power) of app markets," to which Chairman Han replied, "Understood."

Inquiry to native app market 'One Store' instead of Google

The Science, Technology, Information and Communication Broadcasting Committee also summoned Lee Jae-hwan, CEO of the native app market One Store, as a reference witness to inquire about the overall situation of app markets.

Regarding One Store’s 50% commission reduction for small and medium app developers, it was revealed that "developers have about 100 billion KRW in cost savings."

Lee Jae-hwan, CEO of One Store, responded this way to a question from Han Jun-ho, a Democratic Party member, about the background of the commission reduction during the National Assembly Science, Technology, Information and Communication Broadcasting Committee audit.

One Store announced that until the end of 2021, it would reduce commissions by 50% for businesses with monthly transaction amounts under 5 million KRW.

Lee explained the background, saying, "Companies struggling due to the recent Google (in-app payment) issue are also affected by the novel coronavirus (COVID-19), so this decision was made to protect the domestic industry ecosystem."

He added, "Commissions account for about 30% of operating profit for developers, so the burden is quite significant," and said, "The saved amount is being effectively used for overseas expansion, follow-up project development, employment, etc. It is regrettable that the savings are not larger because One Store’s market share is not high."

When will Google, Naver, and Kakao witnesses appear?

During the audit, remarks were also exchanged regarding the adoption of witnesses from Naver and Kakao. Park Sung-joong, a member of the opposition People Power Party and committee secretary, said, "It is regrettable that witnesses from Naver and Kakao were not adopted," emphasizing, "There are criticisms in the media that only domestic portals are being harassed while foreign portals are not properly monitored. Global platforms like Google and Netflix should be required to designate representatives to ensure their appearance." Park had requested the adoption of Lee Hae-jin, Naver’s Global Investment Officer (GIO), as a witness the day before.

In response, Jo, the ruling party secretary, said, "We agreed to make a decision regarding witnesses by the 12th," adding, "Let’s also conclude on other witnesses and reference witnesses, including portal operators."

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