Kim Young-sik: "Apple Passes Mobile Carrier Advertising Costs Even After Consent Decision... Up to 60 Billion KRW Unfair Profit"

"Preventing Manipulative Consent... 'Apple Anti-Manipulation Act' to Be Proposed"

[Asia Economy Reporter Seulgina Jo] Apple Korea, which was embroiled in a controversy over advertising cost abuse, is estimated to have unfairly gained approximately 40 billion to 60 billion KRW by shifting its advertising costs to the three major mobile carriers even after applying for consent decree. There is criticism that the 100 billion KRW mutual growth support fund, which was presented as a voluntary corrective measure, was effectively passed on to the three carriers.

According to the office of Kim Young-sik, a member of the National Assembly's Science, ICT, Broadcasting and Communications Committee from the People Power Party, on the 28th, Apple Korea has still been shifting its advertising costs to the three carriers?SK Telecom, KT, and LG Uplus?citing the reason that it has not been able to conclude new contracts replacing the existing unfair contracts even after the confirmation of the 100 billion KRW consent decree on January 27 this year.

Considering that the advertising costs shifted by Apple to the three carriers are estimated to be 20 billion to 30 billion KRW annually, Apple’s unfair profits over the two years since applying for the consent decree on June 4, 2019, until now amount to 40 billion to 60 billion KRW. This corresponds to half of the 100 billion KRW consent decree amount that Apple is supposed to bear as a mutual growth measure.

Rep. Kim stated, “Apple Korea has had sufficient time?two years since applying for the consent decree (June 2019) and five months since its confirmation (January 2021)?but has not improved its unfair practices,” adding, “If the unfair practices are not improved by July 1, the start date of consent decree implementation management, it is desirable for the Fair Trade Commission to cancel Apple’s consent decree.”

The unfair practice subject to Apple’s consent decree (shifting advertising costs) began in 2008 with the introduction of the iPhone. Rep. Kim argues that the profits gained from shifting advertising costs over the two years since the consent decree application should be regarded as Apple’s unfair gains unrelated to the consent decree.

Rep. Kim raised his voice to prevent such crafty consent decrees like Apple Korea’s. He said, “I will propose an amendment to the Fair Trade Act, known as the ‘Apple Craft Prevention Act,’ which requires ‘restoration of transaction order’ and ‘consumer damage relief’ to begin at the consent decree application stage before proceeding with the consent decree.”

Furthermore, Rep. Kim claimed, “Apple Korea is estimated to have unfairly gained 40 billion to 60 billion KRW by shifting its advertising costs to the three mobile carriers even after applying for the consent decree,” and urged, “The tax authorities should step up to conduct tax investigations to ensure proper taxation on these unfair gains.”

Earlier, the Fair Trade Commission investigated Apple Korea on charges of abusing its superior position by forcing domestic carriers to pay advertising costs and shifting free repair costs, and confirmed Apple’s consent decree earlier this year, which centered on a 100 billion KRW mutual growth fund. The consent decree is a system that concludes a case without confirming legal violations by reviewing voluntary corrective measures proposed by the investigated business operator. At that time, some criticized that the amount was far less than the advertising costs shifted to the three carriers, suggesting that Apple was given a cheap exemption.

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