South Korea’s Communications Commission has determined that Google has not complied with the nation’s law – the first of its kind in the world – requiring operators of app stores to allow third-party payments.
The law came into effect in September 2021, after South Korea decided the likes of Google and Apple wield too much power to set prices, and skim fees, and that developers and innovation are therefore harmed.
But Google’s response saw it continue to funnel all transactions through the Play Store, and to charge a fee for all transactions – even when users chose third-party payment providers.
Google did reduce the fees it charges when users choose third-party payments – but by just four per cent.
As the web giant explained: “For example, when the service fee is 15 per cent for transactions through Google Play’s billing system, it will be 11 per cent for transactions made through an alternative billing system.”
Developers in South Korea responded by not integrating a new payment system into their apps, and instead including links to third-party payment systems that never touch Google’s Play Store, and should therefore evade all charges Google imposes.
Google deems such links make apps non-compliant with its Payment Policy.
Publishers of non-compliant apps are already prevented from publishing updates, and Google has stated that from June 1, 2022, it will remove non-compliant apps from the Play Store.
A Korean developers’ association asked the Communications Commission to consider whether Google is complying with the law. In a Tuesday ruling, the Commission answered that question in the negative.
The Commission’s reading of the relevant legislation is that anything that stops consumers accessing an alternative payment system is out of bounds, that in-app links to payment systems are just fine, and that Google’s planned deletion of apps would be out of order.
The Register has asked Google for comment on the matter.
Google recently announced an experiment in third-party payments around the world, starting with Spotify, but did not suggest its trials would be widespread or rapid. Your correspondent therefore expects Google will soon appeal this interpretation of South Korea’s law, since failing to do so would open the door for developers to bypass Play Store fees entirely.
Google and Apple have argued those fees are akin to rents paid for real-world retail premises because they reflect the cost of operating their digital stores. If that’s the case, the two tech giants are almost certainly smart enough to devise alternative charges that help them to recoup the cost of their app stores and cream some profits too. ®