According to reports, the Korea Communications Commission (KCC) said this week in its latest legal guidance that if Google continues to remove apps from the App Store that link to external payment methods, it will violate South Korean law.
Last year, South Korea passed a law requiring mainstream app stores to accept third-party payment methods, and Google has agreed to comply. Google then allowed developers to use third-party payment methods in the in-app billing system alongside Google’s payment methods. However, Google still takes a commission from fees charged through third-party tools, which is only 4% lower than what is paid through Google’s system.
If the user’s original commission rate when shopping in the app is 15%, then the rate through third-party payment tools is 11%. In addition, Google charges a commission as low as 6% for users who pay for e-books.
However, Korean developers are not happy with this. Developers reportedly responded by linking directly to external payment tools to avoid paying Google a commission. For such behavior, Google blocked the updates of these apps and warned the relevant developers that if they continued to provide external chain payments by June 1, these apps would be removed from the Google Play Store.
In response, an application developer association in South Korea lodged a complaint with KCC, asking KCC to clarify whether Google’s actions were legal. For off-chain payments, the relevant legal wording was very vague before, and it was not clear whether it was allowed. According to KCC’s latest legal guidance, it’s perfectly okay for apps to choose to link to external payment tools, and it’s illegal for Google to restrict or remove these apps from being updated.
If Google removes these apps with external links as planned, KCC will conduct preliminary status checks to determine specific violations. If the KCC finds that Google is indeed breaking the law, it can impose a fine equivalent to 2% of Google’s Korean App Store’s annual revenue. A Google spokesman said the company is studying the KCC’s guidance and will work with app developers in South Korea to expand developer options.
Google recently launched a pilot to allow developers like Spotify to use their own payment methods. However, app developers still have to adopt in-app payment systems, not external chains. In addition, Apple recently started allowing content apps like Netflix and Spotify to link to its own website for payments as part of a settlement with Japan’s Fair Trade Commission.