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(2nd LD) S. Korean app developers cry foul over Google's 30 pct fee on all apps

All News 16:31 September 29, 2020

(ATTN: ADDs comments from the Korea Communications Commission in para 11)
By Chae Yun-hwan

SEOUL, Sept. 29 (Yonhap) -- Google Inc. faced strong backlash from South Korean developers after it announced Monday (U.S. time) it will enforce its app market's billing system, which charges a 30 percent fee to all app developers.

While Google has taken a 30 percent cut for all in-app purchases on the Play store through its billing system, some apps have circumvented the rule by using other systems, such as direct credit card payments.

"We have clarified the language in our payments policy to be more explicit that all developers selling digital goods in their apps are required to use Google Play's billing system," Google said in a post, adding it would give app developers a one-year grace period to adopt the system, while it will start enforcing the billing system on the Play store's new apps Jan. 20.

Google said in the post the policy change will not affect the majority of app developers as nearly 97 percent of those that sell digital goods already use the Play's billing system. It added that just 2 percent of South Korean app developers would be affected by the policy change.

(2nd LD) S. Korean app developers cry foul over Google's 30 pct fee on all apps - 1

The move has prompted an outcry from South Korean app developers that worry it will harm the local app industry.

Last month, even before Google's official announcement, the Korea Internet Corporations Association, which represents major local tech companies, such as top portal operator Naver Corp., requested the country's telecommunications regulator, the Korea Communications Commission (KCC), to look into the then purported policy changes.

The group argued the move would lead to more fees on app users and further solidify the dominance of Google, which holds a strong grip on the local app market.

Google's Play Store held a 63.4 percent share of total app store sales in the country last year at 6 trillion won (US$5 billion), compared with Apple's App Store with a 24.4 percent stake at 2.3 trillion won, according to the Korea Mobile Internet Business Association.

Local app developers have also argued that Google's move could be in violation of local telecommunications rules that prohibit unfair restrictions for users choosing services.

Han Sang-hyuk, the chairman of the KCC, told lawmakers earlier this month that he views Google's enforcement of its billing system as a violation but is currently reviewing the matter.

In response to the latest announcement, the regulator said in a statement that it will check Google's new policy for potential violations and will also conduct surveys on app developers and users on its impact. The ICT ministry has also started surveying local app developers to review fees imposed by online platform operators since last month.

(2nd LD) S. Korean app developers cry foul over Google's 30 pct fee on all apps - 2

Google downplayed the concerns, saying it was committed to an open system and would comply with local laws.

"Developers are not required to use Google Play. Android provides flexibility to use many other Android app tools without using Google Play's billing system," said Purnima Kochikar, a director at Google Play, in an online briefing, citing other options, such as Samsung Electronics Co.'s Galaxy Store and ONE Store operated by the country's top mobile carrier, SK Telecom Co.

Google also took aim at the country's top Internet portal operator Naver and top messenger operator Kakao Corp., citing that they were able to achieve success in overseas markets through Google Play.

"Naver and Kakao operate unique billing systems to meet domestic market requirements. However, they enjoy the convenience built by Google Play's billing system in overseas markets," she said, pointing to the popularity of Kakao's manga app Piccoma and Naver's Line Manga in the Japanese market via its billing system.

Amid discontent among local developers, Google announced that it would spend 115 billion won over the next 12 months to support South Korean app developers that provide digital content services, and provide user benefits such as discounts.


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