Apple and Google anger app owners with 30% fees
Like small and innovative companies everywhere, they are fed up with paying a 30 percent commission for in-app transactions made through Apple's App Stores and Google Play.
The Korea Startup Forum (KSF), a non-profit group representing 1,500 start-ups, submitted a petition to the Korea Communications Commission (KCC) on Wednesday. It requests a review on whether the in-app transactions policies of the Apple-Google app duopoly violate the domestic telecommunications business law.
Since 2011, Apple has required in-app purchases for all mobile services and has charged 30 percent of the transaction value as a commission fee. Google, on the other hand, charged the same amount for gaming apps only until recently. The different policies led to users of Android and Apple sometimes paying different amounts for the same mobile app. For example, 100 “cookie” points used on Naver’s webtoon platform have been 10,000 won ($8.40) for Android users and 12,000 won for iPhone users.
Last month, local media started reporting that Google would expand its policy to all mobile apps on its platform. Like Apple, it would start charging the 30 percent fee for content providers like Naver and Kakao, including music and video services.
The impact is not significant for music services like Melon and Genie, as the consumers can also pay for the service via computers, but mobile-based services do not have an alternative payment method. KSF said in a statement the 30 percent fee is much more expensive by four to 30 times compared to commission fees required by other payment methods, like credit cards or bank transfers.
“This policy is more detrimental for small- and medium-sized developers and start-ups than big companies that have negotiating power,” said Choi Sung-jin, the executive board director of KSF.
“When Google’s commission policy is finalized, companies need to consider a rise in consumer prices,” said a content business employee.
Google claims it needs the fees for investing in the security and infrastructure of Google Play.
Google distributes 63.4 percent and Apple distributes 24.4 percent of the available apps in the country. The stores together occupy 87.8 percent of the market, which gave rise to concerns about monopoly.
“The participants of the app market are knowledgeable about Apple’s commission policy before they list their apps on the platform,” Joh Sung-wook, the chairperson of the Fair Trade Commission (FTC) said in a National Policy Committee last month. “However, we will take a look into the causes of the overpriced commission fees.”
KCC Chairman Han Sang-hyuk also pledged to find a solution with the Ministry of Science and ICT and the FTC during a National Assembly committee meeting.
Rep. Park Sung-joong of the main opposition United Future Party (UFP), and an assistant administrator of the Science, ICT, Broadcasting, and Communications Committee, recently proposed an amendment in the Telecommunications Business Act that would prohibit app market operators from charging commissions.
Companies abroad are facing similar problems against these app market giants.
Epic Games, the developer of Fortnite, which has 350 million players worldwide, on Aug. 13 introduced its Epic Direct Pay, its own payment system. Users of this payment method can receive a 20 percent discount on fees.
In response to the move, Apple and Google both deleted Fortnite from their app services. Epic Games then filed an antitrust lawsuit in the District Court for the Northern District of California against Apple.
Legal conflicts are expected in Korea as well. Angry People, a website that connects a group of people who need legal assistance with attorneys, said it has started gathering people who have been victims of Apple and Google’s commission policies.
“We started looking for people who were impacted by the commission policy because start-ups have been coming to us for help, saying it is a matter of survival,” said Angry People CEO Choi Cho-rong.
BY SHIM SEO-HYUN, JUNG WON-YEOB [firstname.lastname@example.org]