KCC Continues Six-Month Investigation into App Market Abuse

Investigation into App Market Abuse Launched in August Last Year
Originally Planned to Release Results by February 15 This Year but Failed to Do So

[Asia Economy Reporter Kang Nahum] It has been six months since the Korea Communications Commission (KCC) began a fact-finding investigation to determine whether app market operators such as Google have violated the 'Google Gapjil Prevention Act (Amendment to the Telecommunications Business Act),' but no conclusion has been reached yet. Meanwhile, consumers continue to suffer damages, having to pay high prices to use content.

On the 27th, a KCC official stated, "To determine whether there has been a violation, we need to analyze the materials submitted by the app market operators involved and hear the positions of the app market operators and the merchants, but these procedures have not yet been completed."

Previously, the KCC judged that Google's forced 'in-app payment' practice might be illegal and converted the ongoing inspection of major app market operators, including Google, into a fact-finding investigation. According to the 'Fact-Finding Investigation Plan on Prohibited Acts by App Market Operators' prepared by the KCC, the investigation period was set from August 16 last year to February 15. Despite exceeding the originally planned investigation deadline, no conclusion has been reached.

The KCC's fact-finding investigation is based on the 'Google Gapjil Prevention Act.' Enforced since March last year, this law penalizes cases such as deleting or restricting apps that use outlinks or other payment methods and prohibiting the use of payment methods that are advantageous to users.

Large app market operators like Google and Apple argue that they have not violated the law because they provide the option of 'third-party payment' within the app rather than a specific payment method. On the other hand, merchants claim that although third-party payment fees are about 26%, which is relatively cheaper than in-app payment fees (30%), additional agency fees from payment intermediaries result in higher total fees than in-app payments, effectively forcing in-app payments by the app market operators.

Google also enforces a policy of deleting apps that provide 'outlinks' leading to web payments through app market terms. Because of this, app market merchants cannot even use expressions that guide or encourage the use of the cheaper 'web payment' method.

The conflict between Google and Kakao in July last year is a representative case arising from this in-app payment policy. The conflict erupted when Kakao attached an outlink for web payment within the KakaoTalk app, not complying with Google's in-app payment policy. In retaliation, Google rejected the app update review for KakaoTalk, resulting in Android users being unable to use the latest version of KakaoTalk. This incident became the decisive trigger for the KCC to launch the fact-finding investigation.

The problem is that as the KCC's fact-finding investigation is delayed, consumer damages are also accumulating. Due to Google's enforced in-app payment policy, domestic OTT, music streaming services, and webtoon companies have raised their product prices by about 15%. As a result, consumers have no choice but to use services at higher prices than before.

For now, the KCC plans to determine the legality of the app market operators within the first half of the year, draft an agenda, and submit it to the commission for deliberation and resolution. After the commissioners' approval, corrective measures such as fines will be imposed.

However, even if corrective measures are imposed, it is uncertain whether app market operators will comply willingly. There is a high possibility they will file administrative lawsuits through large law firms. In fact, it is reported that the KCC is preparing a two-track approach, including both fact-finding investigations and legal disputes. A KCC official said, "It is premature to comment on things that have not yet occurred, such as legal disputes," but added, "However, the KCC is keeping various possibilities open and preparing accordingly."

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