Korea fines Google, Apple combined $47.6 mil. over in-app payment practices

The Korean government on Wednesday slapped Google and Apple with a combined 63.7 billion won ($47.6 million) in fines for practices including forcing app developers to use their in-app payment systems, marking the first enforcement of the relevant provisions since Korea amended its law in 2021 to prohibit such practices.

During a plenary session, the Korea Media and Communications Commission (KMCC) imposed fines of 42.9 billion won on Google and 20.81 billion won on Apple, along with corrective orders.

The commission said the U.S. tech giants violated the Telecommunications Business Act, which prohibits app market operators from forcing developers to use specific payment methods.

Google and Apple allowed only their own in-app payment systems and third-party payment options, but imposed a 26 percent commission and unreasonable conditions on third-party payments, effectively forcing developers to use their own systems, according to the commission.

The commission also said the two companies unfairly delayed app reviews by failing to provide specific reasons for delays or clear responses to individual inquiries about the reasons and expected review schedules. The commission also found that Apple’s practice of charging different commission rates to domestic and foreign app developers violated the law.

The KMCC ordered the companies to allow links directing users to external payment websites within apps and revise their commission structures. Both companies must implement the corrective measures within three months of receiving the orders.

In 2023, the KMCC notified the two companies of its proposed corrective measures, but the notification was only a preliminary step with no legal effect. It took more than three years for the commission to reach a final decision, making the corrective measures legally binding.

In March this year, Google announced plans to revise its payment policies, including allowing external payment options and lowering service fees, with the changes scheduled to take effect on Dec. 31. However, this was not considered in the KMCC’s decision.

Google Korea released a statement and expressed regret that its efforts to comply with the law and support Korean developers were not fully reflected in the KMCC”s decision.

Some observers also raised concerns that the decision could develop into a trade dispute between Korea and the U.S.

The KMCC said the corrective measures were necessary to protect users’ rights and establish fair competition, stressing that it applies relevant laws equally to domestic and foreign companies without discrimination.

“This decision marks the first enforcement action against mandatory in-app payment practices since the law was amended in 2021,” the commission said. “It is a significant step toward correcting unlawful practices by app market operators and creating a fair competitive environment.”